Viewpoint

Penalizing Performance

FROM THE CHIEF MEDICAL EDITOR

Larry E. Patterson, MD

Faithful readers of this column (I’d like to thank you both) know that I’ve been integrally involved in outpatient ophthalmic surgery for some time and from many vantage points — as an ASC developer and owner, and as a Board member, President and currently Government Relations Committee Chairman of the Outpatient Ophthalmic Surgery Society. In these capacities, every so often I encounter an issue that encapsulates all that is right about what we do as progressive ophthalmic surgeons and all that is wrong about the regulatory and reimbursement policies under which we operate. I’m inspired to pontificate a bit by Senior Editor Jerry Helzner’s cover story in this issue.

Around a decade ago, OOSS and the ASC community commenced working with CMS and Congress to develop a new ASC payment system. All parties recognized that there should be some disparity between payments made to hospital outpatient departments and ASCs, presumably reflecting differences in costs, like medical education, research, emergency services and so on. However, it never occurred to anyone that lower-than-inflation updates and arbitrary budget neutrality adjustments could distort these disparities beyond imagination. Just eight years ago, ASC payments as a percent of HOPD rates were 84 percent; in 2008 it was 65 percent; today it stands at about 58 percent. In other words, hospitals now make nearly twice what ASCs make for the identical procedure!

Our cover story describes an opportunistic strategy under which entrepreneurial hospitals are acquiring ASCs, converting them to HOPDs and billing services at the much higher hospital rates. This means that the ASC received about $960 for a cataract operation, and then the day the hospital changed the sign on the building, Medicare (and the patient) paid almost $1,700 for the same operation on the same patient in the same facility. We ASC folks are being penalized for our more efficient performance in the OR, instead of rewarded.

What policy would make sense? We know that by modestly and equitably increasing ASC payment rates, surgery centers will attract patients that otherwise would be treated in the much more costly hospital environment. And now, perversely, some facilities are incentivized to sell out to hospitals that can “turn the switch” and — overnight — bill Medicare hundreds of dollars more per case.

How many ophthalmic facilities will follow the example discussed this month? Time will tell. An ophthalmic surgeon who develops his own ASC is by nature fiercely independent. When one considers that the ASC is the most profitable component of his practice, selling out to a hospital is likely a bad business and “quality of life” decision.

Isn’t it strange how simple the answer has been all along? Pay the ASC a few more bucks (but still well below hospital rates), attract patients from the higher-cost HOPD setting and save Medicare hundreds of millions of dollars. Sadly, we are dealing with the federal government. This “unintended consequence” of federal policy offends me as a physician, as an ASC owner, as a medical association leader and, mostly, as a taxpayer. I assure you that OOSS and the ASC community are pressing Congress and CMS to identify the scope of this ASC-to-hospital conversion problem, including ascertaining the potential cost to Medicare, and will develop and lobby for an appropriate solution.