New Medicare payment rates for ambulatory surgical center (ASC) and hospital outpatient services became effective on January 1, 2023. Among the most significant components of the new ruling from the Centers for Medicare and Medicaid Services (CMS) is a 3.8 percent increase in payment rates for ASCs that meet applicable quality reporting requirements. This rate increase will affect approximately 6,000 ASCs.
“The Outpatient Ophthalmic Surgery Society and the ophthalmology and ASC communities are very pleased with the 3.8 percent update, which is the largest increase in many years,” says Mike Romansky, JD, Washington counsel for the Outpatient Ophthalmic Surgery Society (OOSS) in Washington, D.C. “While this update doesn’t fully meet the inflationary costs of staffing, equipment, and supplies, it’s a step in the right direction.”
The final rate is 1.1 percent higher than the 2.7 percent CMS initially proposed back in July 2022. The increase reflects the hospital market basket index of 4.1 percent, less the multifactor productivity adjustment of 0.3 percent.
John P. Blanck, CPA, principal at Blanck Healthcare Consultants in Kansas City, Missouri, was also pleased with the increase. “Compared to physician fees that continue to decline, a 3.8 percent increase for ASCs is very good,” he says. “While ASC labor costs will likely increase more than this, many of the ASC facility, equipment, and other fixed costs should be below this percentage, so all in all, it’s a nice increase.”
Robert Wiggins, MD, MHA, president of the American Academy of Ophthalmology (AAO) in San Francisco, was less enthusiastic. “Any increase in reimbursement is appreciated, and inflationary increases are now based on the hospital market basket, less a productivity offset, rather than the consumer price index,” he says. “However, the increase doesn’t match high inflation currently present in the economy, which is impacting supply costs and staff wages.”
For example, Dr. Wiggins says that his ASC in Asheville, North Carolina, recently trained a surgical technician. After one year, the tech is requesting a 20 percent wage increase to match an offer from another facility. “ASC facility payments still lag significantly compared to those that are paid when the same procedure is performed in a hospital-based outpatient department,” he says.
Prioritizing Procedures
Reimbursement increased marginally across the board with CMS’s ruling, Blanck says. Given this, ASCs should continue to focus on physicians and cases that are profitable for centers and safe to perform, he says. “When CMS reimbursement doesn’t support certain procedures or supplies, surgeons should work to find alternatives for their patients,” he says.
Given the new ruling, experts recommend prioritizing certain procedures over others to maximize profits. “Short, lower-cost procedures such as cataract and eyelid surgeries tend to have better profitability than longer duration cases with higher expenses, such as some glaucoma, retinal, and corneal surgeries,” Dr. Wiggins says.
Blanck would advise ASCs to recruit high-volume, quick, and efficient cataract surgeons. “Doing four cases in the operating room per hour could yield a net margin of nearly $3,000 an hour, which is better than most specialties,” he says.
Moving 400 YAG surgeries from an office to an ASC could yield incremental profits of more than $100,000 annually, Blanck says. “YAG laser capsulotomy procedures can be immediate opportunities, as many physicians—even those owning a portion of their own ASC—perform them in their offices,” he says. “While a surgeon’s fee is approximately $22 less when they perform a YAG in an ASC, the ASC receives $270 for the quick, low-cost procedure.”
Many minimally invasive glaucoma surgeries (MIGS) can add a nice incremental margin, Blanck adds. “Selecting patients on both a financial and clinical basis is important, as is shrewd negotiations with the distributor of a device or implant,” he says.
Also consider prioritizing the implantation of Durysta (Allergan/AbbVie) for glaucoma patients, which will yield a $1,060 facility fee for quick and low-cost procedures, Blanck says. Medicare’s allowable amount is $2,000 for the drug, plus a $1,060 facility fee. Patient selection on both a clinical and financial basis is critical. “Keep in mind that it isn’t financially viable for an ASC to perform this procedure if a payer won’t reimburse for the $2,000 drug,” he says.
Under CMS’s nonopioid pain management program, Omidria (Omeros) and Dextenza (Ocular Therapeutix) will continue to be paid for separately in an ASC setting, Romansky says. The Dextenza implant can add $60 to $80 of incremental margin per case to cataract and other ophthalmic procedures, so consider promoting these procedures as well, Blanck adds. He explains that Omidria can add approximately $30 of margin to a cataract procedure, but it can pose a logistical challenge because the medication must be added to a balanced salt solution.
Maximizing Revenue
Case costing is critical, now more than ever. “Fifteen years ago, the economics were fairly simple,” Blanck says. “ASCs would focus on managing staffing, ophthalmic viscosurgical devices, intraocular lenses, phaco tubing, and other disposables. Reimbursement was $900 per case and the cost per case ranged from $225 to $400.”
Now, with MIGS, Omidria, Dextenza, femtosecond laser–assisted cataract surgery, and premium lenses for cataract surgery, Blanck says that ASCs can add more than $4,000 in incremental costs per case. “It’s important to have detailed costs per case by each physician, and it’s imperative to ensure that you’re tracking and matching billable supplies, implants, and drugs to the reimbursement,” he says.
Dr. Wiggins maintains that ASCs can increase profitability by employing efficient surgeons who use supplies appropriately while providing high-quality care.
“Every effort should be made to gain consensus among surgeons performing similar procedures on standardizing instrument trays and supplies as much as possible and avoiding waste (e.g., not opening supplies which aren’t used),” Dr. Wiggins says. “Activity-based costing should be performed for each procedure so that all costs associated with a procedure are identified and the profit or loss calculated after accounting for the revenue received for that procedure.”
Avoiding Missed Revenue
ASCs can shortchange themselves when they don’t use appropriate codes and modifiers or don’t bill for implants or allowed supplies. Dr. Wiggins recommends that ASCs use a checklist for all supplies for which additional payment may be possible (e.g., certain implants and medications which are included under the program to reduce use of opioids for pain management, such as Omidria or Dextenza).
“A good process must be in place to ensure that prior authorizations for a procedure are obtained as well as a timely report on denials after claims are filed,” Dr. Wiggins says.
Other Outcomes
ASCs should also be aware of a few other significant changes made in CMS’s ruling. Specifically, the adoption of the quality reporting measure ASC-11 (“Cataracts: Improvement in Patient’s Visual Function Within 90 Days of Cataract Surgery”) has been suspended due to the ongoing COVID-19 public health emergency. “ASCs had expressed concerns that this measure was largely out of their control and would be difficult to monitor because the data is collected at medical practices rather than ASCs,” Dr. Wiggins says. In its final rule for 2023, CMS stated that the requirement to report ASC-11 is burdensome due to national staffing and medical supply shortages, coupled with unprecedented changes in patient case volumes.
Dr. Wiggins also notes that one of the most important outcomes of the 2023 final rule was CMS’s decision not to include payment for cataract, glaucoma, retinal, and other ocular surgeries performed in an office surgical suite, rather than an ASC or hospital. “Concerns had been raised about the safety of performing these procedures in the office on patients who often have significant co-morbidities,” Dr. Wiggins says. “CMS also wanted time to determine how frequently these procedures were being performed in-office. CMS will continue to evaluate the feasibility of establishing payments for these procedures performed outside of a facility.” (For more information, see “The Office-Based Eye Surgery Debate Continues,” p. 18.)
CMS’s ruling also includes policies that align with several key goals of the Biden Administration, including addressing the health equity gap, fighting the COVID-19 public health emergency, encouraging transparency in the health system, and promoting safe, effective, and patient-centered care.
Effects of Withdrawing the J-code
Although some experts thought that a new J-code for Genentech’s Susvimo might bring more retina surgery cases into ASCs during 2023, Genentech voluntarily stopped distributing the ranibizumab implant, which is used to treat adults with neovascular (wet) age‑related macular degeneration, in October 2022.
“It was expected that the Susvimo implant would result in more anti-VEGF treatments being moved to facilities from office settings,” Dr. Wiggins says. “The implant contains a reservoir that can provide a storage area for ranibizumab which could last for six months, whereas some patients require repeat anti-VEGF injections monthly in the office.
Roughly a year after receiving FDA approval for Susvimo, Genentech temporarily withdrew the device from the market due to quality control concerns with the implant. “It’s expected that once these issues are resolved that the implant will once again be a candidate for use in ASCs and the migration of suitable retinal procedures from the office to the ASC setting will occur,” Dr. Wiggins says.
Another implication is that while anti-VEGF injections remain in the office, there will be more pressure on ophthalmologists by insurance companies to use step therapy, which incorporates less expensive alternatives, including new biosimilars, Dr. Wiggins concludes. OASC
