Q&A: Ambulatory Surgery Center Association CEO William Prentice weighs in on new HHS nominee

With Dr. Tom Price headed for confirmation to lead HHS, ambulatory surgery centers, often physician-owned, have cause for optimism. Price, an orthopedic surgeon and member of the U.S. House of Representatives, once chaired a chain of ASCs in his home state of Georgia. Recent CMS rules equalizing payments to ASCs and hospital outpatient departments were a start, says William Prentice, CEO of the Ambulatory Surgery Center Association, which represents nearly 3,000 of the 5,600 centers in the U.S. What follows is an edited transcript of his interview last week with Modern Healthcare editor Merrill Goozner.

Modern Healthcare: What issues would you like to see the new administration tackle?

William Prentice: Reimbursement is always the top priority, particularly with the Medicare program (ASCs received a 1.9% boost from the CMS for 2017). We also spend a lot of time on the quality reporting program to make sure they're focusing on the right thing.

MH: Will the political changes be positive or negative for your members?

Prentice: It's still too early to tell. We will have to see how Dr. Price's nomination goes and how his nomination will percolate down through the various agencies. It's obviously going to be tumultuous, especially with repeal and replace of the Affordable Care Act. We might get a new look because of the efficiencies we bring. But it will be hard to tell until the dust settles. The fact we will have a surgeon who has practiced in an ASC provides some comfort to us that our concerns will be taken seriously.

MH: CMS' mandatory bundled-payment program doesn't apply to ASCs. But how does your group view bundled payments generally?

Prentice: We tried to get a CMMI (Innovation Center) grant to look at bundled payments in the ASC setting. It wasn't accepted. The issue for us, since ASCs are smaller, is that we have not been as quick to jump into the risk-bearing experiments like that.

MH: Are you facing any pressure from private payers on bundled payments?

Prentice: In some markets, yes, predominantly around things like orthopedic procedures. But it's in the very early stages at this point. But when it comes to more complex procedures, not yet. But there are great opportunities.

MH: How so?

Prentice: It comes down to bearing risk. What has made ASCs successful historically is selection of patients, and making sure the right patients are being seen as outpatients. The fact they have the same team means they are very comfortable and the likelihood of a bad outcome is very remote.

MH: What's your view on hospitals acquiring ASCs?

Prentice: We have expressed concern about that rate of consolidation, especially when it comes to hospitals and health systems buying primary-care practices and what it might mean in getting patients to the lower-cost setting of an ASC. But on the other hand, you can say hospitals investing in ASCs is a recognition of the good care that is being provided there.The decision by UnitedHealth to purchase SCA (Surgical Care Affiliates) is a great indication that payers are recognizing the value that ASCs represent and the opportunities we offer to reduce costs for outpatient surgery. We did a study last year that showed that using ASCs as a site for outpatient care saved the healthcare system $38 billion compared to the cost of care in hospitals.

MH: Hospitals argue that their acquisitions are part of their move to value-based care. Does value-based care pose a challenge to the ASC business model?

Prentice: How do you determine value? We think we have a good story to tell. We marry efficiency and low cost to high quality.

MH: Were you pleased by the final rule on payments to hospital-acquired or newly built outpatient facilities?

Prentice: The issue is whether they'll get the hospital rate for what was formerly an ASC rate. The decision was that if a hospital acquired a surgery center more than 250 yards off the campus, they could no longer change the license to be part of the hospital and start charging the hospital rate. ASCs are currently paid about half of what hospitals are paid. The purpose of this rule is to convince the hospitals that if they acquire an ASC, keep it as an ASC.

MH: Is the new CMS program for measuring quality at ASCs fair?

Prentice: Because it came later in the game, the CMS learned some of the lessons, as the whole quality community has, about what is important to measure. Hospitals have historically been asked to measure a lot of processes. And it was increasingly clear that it was hard to tie those processes to better outcomes. So what folks are really looking for now is outcomes-based measures. What happened on the day of surgery? Did it lead to the right outcome? What we'd like to see is more apples-to-apples comparisons. Let's measure the same things in hospitals as we measure in ASCs. We think that needs to be addressed.

MH: For example?

Prentice: Hospitals don't report on wrong-site surgery. We report on wrong-site surgery. If a surgeon, God forbid, operates on the wrong eye or the wrong limb, we have to report that. There's not a similar requirement for hospitals.

We have to report on patient falls. They don't have to report on them. Going forward, that needs to be addressed.

MH: Some argue physician-owned ASCs create an incentive for overutilization. Is that a problem at ASCs?

Prentice: No study can show that. And if you look at the volume of care that goes unmet, I would dispute that. There are still millions of patients out there who are not getting adequate care because of a lack of insurance and high deductibles. The volume of patients who need care with the graying of America is only going to go up. Both the Medicare program and commercial payers spend lots of money on utilization review. If there are bad actors out there, it should be addressed. But to say there is an overabundance of sites of care in ASCs, I don't think there's evidence to show that. Every center for care, whether a hospital, an ASC or a physician office, if you bring in more cases, you bring in more revenue. There's nothing peculiar to ASCs in that regard. That said, there are medical ethics that require physicians to only treat people who have a problem that needs to be addressed. And there are insurers and state and federal governments that go after healthcare fraud, as they should.

MH: Advances in technology could be a boon to ASCs in the years ahead. We're seeing more procedures that can be done on an outpatient basis. What's ahead?

Prentice: The success of ASCs is due to advances in clinical practice, anesthesia and pain control. It's allowed increasingly complex procedures to be performed on patients who can walk out on that day. That trend will continue. We're seeing patients who are having total knee replacements and hip replacement and leaving to go home within 24 hours.

MH: What's the biggest threat to your continued growth?

Prentice: The big concern for us is the high deductibles that increasingly patients bring with them when they come for care. And the lack of transparency for patients on where to go to get the best care at the best price. What I'd like to see is a greater effort to build that transparency into the healthcare system. It's easier for us to figure out the quality of the food we get in a restaurant tonight than the quality of care we'll get tomorrow at a hospital or ASC. That needs to change. Too many patients equate costs with quality. They think if they pay more, they'll receive better quality. I think we all know that's not the case.