13 Major Changes Facing ASCs With Dr. Brent Lambert of ASCOA

1. More reliance on government payors. Look for a big increase in government-paid healthcare under health reform, particularly in Medicaid. For ASCs this means low reimbursement rates and a rigid bureaucratic approach with no option to negotiate contracts as in the private sector. "Right now, about one-third of all patients are government-paid," Dr. Lambert says. "Under health reform it's going to double or even triple, depending on how this all falls out."

2. Reimbursements continue to fall. Reimbursements have been declining as out-of-network opportunities with private payors become less common and Medicare reimbursements fail to keep pace with inflation. One modest improvement is a recent increase in Medicare orthopedic reimbursements. However, "every week I'm seeing two or three failing centers that need help," Dr. Lambert says.

3. Decline in the number of ASCs. Medicare figures show the number of ASCs last year rose by the smallest amount than at any time in the past 25 years, and Dr. Lambert predicts the number of ASCs will actually decline for the first time this year. This is due to declining reimbursement and a growing unwillingness of physician-investors to cover shortfalls of unprofitable ASCs, which now make up about half of all surgery centers.

4. Fewer surgeons for ASCs. While normal retirement rates would produce an attrition rate for surgeons at 15 percent in the next five years, some estimates put that rate at 40 percent because many older physicians are alarmed about health reform and want to retire early. "I see it all the time, physicians saying, 'I'm getting out,'" Dr. Lambert says. "The impetus is health reform."

5. Not enough physicians overall. The law is giving coverage to 32 million more Americans, but "how are they going to accommodate them?" Dr. Lambert asks. Even if Congress lifted its freeze on residency potions funded by Medicare, it would take years for enough primary care physicians to get through the training pipeline, and even longer for surgeons.   

6. Emergence of a two-tier healthcare system. Government-paid healthcare will increasingly diverge from private-paid healthcare. While Medicaid rolls grow, physicians will continue to shun these patients, meaning they will have to depend on care from nurse practitioners, physician assistants and nurse anesthetists. Dr. Lambert also sees physicians dropping out of Medicare, fleeing a possible fee cut. In his hometown of Naples, Fla., "you're starting to see doctors not taking Medicare," he says. "That is a watershed event."

7. ASCs are ratcheting up lobbying efforts. The ASC Advocacy Committee, founded last August, may raise as much as $2 million within the next 12 months, which would be an unprecedented war chest of funds. The committee is lobbying the federal government for higher ASC reimbursements and to collect data on quality benchmarks, demonstrating ASCs' outcomes are superior to hospitals'.

8. Hospitals' political power is scary. The political power of the hospital lobby in Washington was blatantly demonstrated by Congress' passage of bans on new physician-owned hospitals and expansions of existing ones in the health reform law. That's troubling because hospitals might use that power to block some pro-ASC initiatives in Congress, Dr. Lambert says.

9. But hospitals actually need ASCs. If all ASC cases went back into hospitals, they wouldn't have the capacity to cover them all, much less make any money on them. For example, most hospitals are too inefficient to now perform cataract operations profitably.

10. An inattentive Congress. It's a bad sign for physicians that Congress still hasn't provided a permanent Medicare fee-fix, even though organized medicine made this a priority. "The government is showing its hand," Dr. Lambert says, adding this does not bode well for other reimbursement issues affecting physicians.

11. But Congress needs ASCs. As the enormous costs of health reform become apparent, Congress will be under strong pressure to save money. That may mean raising reimbursements so that more ASCs can survive. Medicare reimbursements for ASCs are 59 percent the rate for HOPDs. "We're the low-cost, low-complication surgical delivery system in the United States," Dr. Lambert says. "The government doesn't want ASCs to go away. If the number of ASCs fell dramatically, the federal budget would be more expensive."

12. ASCs can point to higher quality. ASCs have low infection rates, 10 times lower than hospitals. "Infection rates, that's where we have hospitals nailed," Dr. Lambert says. "We want the government to start measuring all outpatient programs in the United States. We want outcome studies of HOPDs."

13. Many reforms could be repealed. Republicans stand to win solid majorities in both houses of Congress this fall, but their quest to repeal health reform would be vetoed until 2013, the earliest date a GOP president could take office. But even at this late date, a big chunk of the law could be repealed because many provisions don’t take effect until 2014.

Contact Dr. Brent Lambert at blambert@ascoa.com. Learn more about ASCOA.