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The ASC Insider

ASCs: The State of Our Union

By William Rich III, MD, FACS

Ophthalmologists in ASCs are very frustrated by confusing payment issues and what appear to be obstacles to further ASC development. When you consider payment policy, you really have to look at what forms its core. And what forms the core of payment policy is a mix of three things: public policy, economics and politics. I think many physicians, along with industry, understand the influence of the economics and the policy goals, but they may not realize the large influence that politics has.

David and Goliath

Most of the issues that bedevil industry and ophthalmologists deal with the influence of hospitals on ASC policy. The ASC community — OOSS and the larger ASC community — has done a good job of looking out for the interests of all physicians. However, to be frank, there's no way that they can compete with hospitals. Hospitals will always have the last word even if it's not for the benefit of society or patients. And the reason is simple: hospitals are the largest employer in more than 80% of the counties in the United States.

Hospitals wield immense political pressure. Congress, policy makers and staff workers know this, and hospital boards make it clear what their thoughts and wishes are when it comes to anything that affects the economic viability or the perception of where hospitals want to be now or in the future.

Here's an example: Under the new healthcare legislation, if Medicare medical service growth continues unabated over the next four years, there's a board called the Independent Medicare Advisory Board that will cut physician reimbursements between the years 2016 and 2020 — but hospitals are exempt from these cuts.

Migrating to ASCs

The desire for ophthalmic surgeons to be in an ASC setting is going to exponentially expand because hospitals don't consider ophthalmology a revenue generating service when compared to other medical and surgical specialties. This will create more roadblocks to access in the hospital outpatient department (OPD). In addition, if you look at the years between 1995 and 2005, the payments for major procedures such as cataract, coronary bypass, hip replacements, total knee replacements, and so on, the payments are down 45% in 1995 dollars. Surgeons have to find a more efficient place to perform surgeries in order to survive financially. With further pricing pressure and the doubling of cataract surgical volume within the next ten years, ophthalmologists can't afford to stay in the OPD of a hospital.

The only way ophthalmologists can afford to perform cataract surgery is to be more productive, and you can't do that in an outpatient department of a hospital. So ophthalmologists, more than any other specialty, have migrated to ASCs, where they enjoy better equipment, better control of the processes and flow of care and better outcomes. These benefits have also encouraged retina surgeons to move their work into ASCs.

But the real benefit to operating in an ASC is increased productivity. If you don't do 7 cataracts in half a day, you make more money by never doing cataract surgery and staying in the office. Ophthalmologists love cataract surgery. It's rewarding because we usually enjoy great results and patient satisfaction. But if you want to do it, you have to get out of the OPD.

Ophthalmology is Not the Target

Hospitals don't care about the specialty of ophthalmology because we, as a profession, get the largest percentage of our revenue from Medicare. Hospitals receive substantially higher payments from commercial entities rather than Medicare. So, hospitals look at Medicare patients as a loss.

Hospitals don't want us, but they don't want to see a free expansion of all ASCs. So we get caught in the hospital community's desire to keep ambulatory patients in the OPD. Because the hospital wants to protect its turf, ophthalmologists are hassled when it comes to setting up ASCs with other specialties who perform profitable services in the OPD. The way to get around this is to have ophthalmic singlespecialty ASCs. Even in states with tough certificate of need laws, some hospitals have supported ophthalmic ASCs to free up OPD operating time for more profitable procedures and specialties.

Payment Problems

I think the biggest long-term impediment to a successful ASC is the problem with payment. Hospitals don't want to see ASCs become more profitable because they don't want to see them grow and expand into other surgical specialties. Medicare likes ASCs, because we provide quality care with good outcomes at a substantially lower cost when compared to a hospital OPD. But that doesn't hold much water with Congress. As a result, you see distortions in payment policies. ASCs get paid 40% less than hospitals for the same outpatient procedures. So, we're already at a steep discount compared to what hospitals are receiving for the same procedure under Medicare.

We're now seeing further mandated changes in payment. There's a budget-neutrality adjustment. This means when you expand the number of procedures available in an ASC, the law states that you can't spend more money. Other codes will be cut to make room for new codes brought into the ASC. For example, cataract has the highest procedure volume and we've seen ongoing 2% cuts for the past few years because of budget neutrality.

There's another policy that hospitals were very influential in pushing called "productivity offset." This is a basic economic principle. I explain this by using Dell computers as an example. Dell entered the computer industry and revolutionized the production of computers and dramatically decreased the costs. It should follow that if you could make more computers for less money in a shorter period of time, you increase your productivity. Thus, the price should go down. This is called a productivity offset.

So, in an ASC setting, we're penalized for being efficient. It's believed that because we're more efficient, our price should drop as well. In addition to two types of cuts, ASCs have a lower inflation update. Hospitals receive a market basket increase of about 2.4% based on 2010 data and ASCs get 1.6%. ASCs have a lower inflation adjuster and with cuts from productivity offset and budget neutrality, our payments are going down about 2% a year.

How Do You Score?

ASCs have to deliver more: number one is patient satisfaction, two is patient outcomes and three is public reporting of these. In other words, publicize your scorecards.

There are currently two quality measures that are National Quality Forum (NQF) approved for ophthalmic surgeons and are easily adaptable to ASCs. One is the number of patients who return to the OR within 30 days after a cataract procedure. With the exception of endophthalmitis, this is usually due to a complication attributable to the surgeon, for example, wrong IOL, retained fragment, dropped nucleus. The second is what percentage of your patients see 20/40 after 90 days (with exclusions for patients with underlying retinal or corneal disease who wouldn't be expected to see better than 20/40). The recent health reform law didn't mandate public reporting of ASC outcomes but physicians in ASCs will face quality reporting in the near future. I recommend that general ophthalmologists and retina surgeons start looking at the two NQF-approved measures now.

We're also going to see more standardized surveys to measure patient satisfaction. There is a survey developed by the Surgical Quality Alliance (the Academy and ASCRS are both members) and we developed some questions for this survey that will serve the needs of ophthalmologists in an ASC.

As part of patient-reported outcomes, we'll be asked to record the impact of our surgery on a patient's quality of life and how they function. We're under pressure to create a quality-of-life measure. The AAO and ASCRS are working collaboratively on cataract quality-of-life measures that will be submitted to the NQF for validation.

Along with the pressures of economic cuts, there will be more administrative demands placed on doctors. It's imperative that ophthalmic ASC leaders look at their overhead if we're to remain profitable. This is the world we live in now. You don't need to operate. You can go to the office and make a good living.

Despite all of this, I think ophthalmologists have a gene in their head for analysis. They'll figure out how to make this work because they have to. Young ophthalmologists love ophthalmic surgery — just as I do. I firmly believe that despite the hurdles on the horizon, ophthalmologists will flock to ASCs and learn to navigate their way through this maze.

William Rich III, MD, FACS, is currently the Medical Director of Health Policy for the American Academy of Ophthalmology. Dr. Rich serves as Chair of the Health Professional Council of the National Quality Forum and represents at the Academy at the Ambulatory Quality Alliance and Surgical Quality Alliance.