While the ASC industry as a whole has opportunity for growth, Raghu Reddy, chief administrative officer of Cumberland-based SurgCenter of Western Maryland, is concerned about the lack of accountability for payers.
Mr. Reddy spoke with Becker's about what could happen if this trend continues.
Editor's note: This response was edited lightly for brevity and clarity.
Question: If reimbursement declines for ASCs are not addressed, what is going to happen?
Raghu Reddy: These ASCs that have been around for a long time are going to have to continue to adapt or find avenues to cut costs, but there's only so much to cut. So when you talk about health policy or legislative change, the government has to mandate that the cost of living adjustment for ASCs be addressed. We have not seen any particular increases from the payers in the last four or five years, so most of the response is"take it or leave it." The out-of-network strategy has also completely gone sideways. If there are no legislative changes, then these payers are not held accountable.
Here's another example: They're passing on the cost of premiums to the patients and asking the patients and providers to go to the ASC. But on the flip side, they don't want to reimburse the ASC at the same rate, so that gap has to be addressed. Without any legislative change, it's going to be hard to hold these payers accountable.
Q: How likely is it that payers are going to be held accountable?
RR: Because there is a tremendous amount of lobbying, I don't see anything on the horizon unless somebody champions this initiative. It's been flying on the radar for a very long time ever since I've taken a job in the ASC space, and that was more than 12 years ago. But on the flip side, you cannot blame the government or the federal level because they're doing their due diligence in approving a lot of procedures to be added to the ASC-approved procedure list. It's important to acknowledge the work that the agencies are doing, and at least there is a rate adjustment of 2 to 3 percent every few years. But in the private sector, for example, to get a reasonable fee from a BlueCross BlueShield in a particular state to operate profitably is not even possible anymore unless you are a very large health system who cares for thousands of lives.
Q: How does this bode for the ASC industry as a whole?
RR: I'm not saying that the ASC right now is at a total loss and are unable to profit. They are. I'm talking in the distant future, where the access to physicians is going down for a couple reasons — many of them are being employed by a health system, and the health system has its own ASC, so the independent ASCs lose access to these physicians.
When you lose access to physicians on top of escalating costs, the balance becomes a bit lopsided. I'm talking in a very broad sense, in the pockets where the ASCs are going to struggle. But as of today, in the last 12 years, although the market has stagnated a little bit, it's still profitable. So overall, the industry looks very positive for ASCs, just for some of these disparities should be handled in the long term.