Healthcare Business News

Surprise package

HHS delivers its framework for a value-based purchasing system for ambulatory surgery centers, but ASCs are left wondering who will pay

By Andis Robeznieks
Posted: April 25, 2011 - 12:01 am ET

Industry observers found as many questions as answers last week in HHS' framework for shifting Medicare reimbursement for ambulatory surgery centers to value-based purchasing. They wondered whether the government will reward high-quality facilities at the expense of lower-rated facilities, whether the plan will speed or delay the industry's own quality-improvement initiatives and even whether the agency will have the authority to pull it off.

Although the report to Congress was titled Medicare Ambulatory Surgical Center Value-Based Purchasing Implementation Plan, Mike Nugent, managing director of Navigant Consulting in Chicago, said the document was more a preview of things to come and offered only hints as to what value-based purchasing would look like for ASCs.

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What the report does not address, according to Nugent, is whether this will be a zero-sum redistribution of current resources or if the CMS will add more money to the pool to pay for quality bonuses. If more money is not added, Nugent asked, how much money will be transferred from the low to the high performers? Nugent predicted the CMS will make the switch from volume to value a zero-sum game.

Mark Manigan, an attorney with the Roseland, N.J.-based Brach Eichler law firm, agreed. “They're not putting any more money into the system—I can't see any more money per procedure going into the system,” Manigan said. “If there will be pay for performance, it is going to be paid for by penalizing the underperformers.”

Nugent added that the CMS also showed it is sensitive to adding any administrative burdens to ASCs and to describe in a deliberate manner the processes an ASC would have to build for quality reporting and what measures would be included under a pay-for-performance system. Nugent added that by closely examining procedure margins and volumes, the CMS is sending a signal that—in terms of reimbursement—it will decide “what is reasonable” by using “holistic, strategic and market-based” principles instead of making decisions in a “payment-reform policy vacuum.”

“That means providers need to acknowledge this and take a closer look at their margins and expansion plans—because the nation's largest payer is,” Nugent said. And, he added, “Commercial payers have often followed CMS' lead on reimbursement.”

The report summarizes the growth of ASCs in the past decade, and noted how—from 2003 to 2008—an average of 331 ASCs opened each year while an average of 59 closed or merged with other facilities each year over the same period. Also, Medicare spending for ASCs increased almost 41% in the same period: to $3.1 billion from $2.2 billion—even though Medicare reimbursement rates were frozen for those years.

From there, the report goes on to describe quality problems at ASCs. The report highlights incidents that happened at two Las Vegas ASCs where “an egregious safety lapse potentially exposed over 50,000 former patients to hepatitis C and other infectious diseases” between 2007 and 2008 and 100 people developed hepatitis C as a result of ASC-related exposure.

Dr. David Shapiro, chairman of the Ambulatory Surgery Center Association, was irked by the CMS' reference to these cases. “I think that they're still citing one incident that was alleged to have occurred quite a while ago is very revealing,” Shapiro said. “That one incident is what caused the federal government to begin really scrutinizing ASCs—despite how we have a long track record of high quality.”

The incidents in Nevada were followed by a joint project between the CMS and Centers for Disease Control and Prevention that pilot tested new methods for testing infection control at 32 ASCs in Maryland, 16 in North Carolina and 20 in Oklahoma. According to the report, 46 of the 68 ASCs studied had at least one “lapse in infection control,” while 12 had lapses in at least three of the five infection-control categories studied.

“With any business or industry, there are some people who don't always do the right thing all the time,” said Lisa Austin, president of the Colorado Ambulatory Surgery Center Association. “They are not typical, and they do not exemplify the ASC industry across the board.”

Austin, vice president of operations for the Western region of Lakewood, Colo.-based Pinnacle III, an ASC development and management firm, said the Nevada incident served as “a wake-up call” to underperforming ASCs. She added that the ASC Association launched its own quality initiative in 2006, and was involved in quality improvement and measurement before there was any government pressure to do so.

Austin said she is pleased that ASCs will be getting more scrutiny from HHS and said public reporting of quality measures will shine a spotlight on how well ASCs perform.

Robert Zasa, managing partner of another ASC development and management firm—Pasadena, Calif.-based ASD Management—agreed, and he welcomed the direction HHS was taking. “We like this idea very much,” Zasa said in an e-mail. “The well-run, safer ASCs that pay attention to quality and pay attention to proper quality formats should be rewarded. ... This will create proper incentives for those ASCs that have proper management of their services.”

Shapiro noted how ASCs already are ahead of hospitals in terms of cost reporting, and they are eager for any process that would more widely disseminate ASC quality measures. “We are very serious about getting this up and running as soon as possible,” he said. “I think the only thing I could (negatively) speak to would be further delay. That would be my No. 1 disappointment.”

A delay, however, may be inevitable. HHS' report lists six steps involved in implementing a value-based purchasing program for ASCs, including creating a framework for continuous improvement, a method for abstracting and submitting data, a data validation process, and a model for scoring and evaluating quality data.

First on the list, though, is gaining statutory authority for the HHS secretary to pay for value and outcomes instead of only volume. While the Patient Protection and Affordable Care Act listed several items the secretary must consider in implementing a value-based purchasing plan for ASCs, it did not grant the office the power to allow performance-based Medicare reimbursements, the report said. The only authority the secretary currently has, according to the report, is to reduce the annual payment update for ASCs that fail to report quality measures.

Manigan said gaining statutory approval is not out of the question because this issue “is a minor piece of a large puzzle.” He added that paying more for better care is “not a hard sell, politically,” but today's political climate can make even minor reforms hard to push through Congress.

“Naturally, representing providers, I get nervous because when they say ‘pay for performance,' I hear ‘pay providers less,' but it's hard to take a position that we shouldn't reward quality,” he said. “But in light of the current healthcare policy environment in Washington, I think you have to be foolish to make any policy predictions. Who the heck knows where all this is going?”

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