It wasn't long ago that interventional pain management physicians could perform procedures in their offices and make a good living doing so. But times have quickly changed.
As the American Society of Interventional Pain Physicians reported late last year, CMS' 2014 final rule for physician, ambulatory surgery center (ASC) and hospital outpatient department payments resulted in what ASIPP termed as "devastating" cuts for physicians who base the majority of their practices out of the office setting.
These included cuts of more than 58 percent for the most commonly performed procedures — namely epidural injections (CPT 62310, 62311, 62318, and 62319) — as well as substantial cuts related to spinal cord stimulator trials, transforaminal epidural injections and facet joint interventions when these procedures are performed in an office.
ASCs have also seen their Medicare reimbursement for pain management procedures reduced, but the cut is substantially lower than the reduction hitting office-based practices. This has resulted in an increased interest from office-based pain management physicians, who have seen their revenue decline over the past year, in expanding their offices to include an ASC or converting their procedure suite to an ASC.
While these are worthwhile approaches to consider, it is important for physicians to understand that adding or converting to an ASC is not a simple process. Rather, opening an ASC that can receive facility reimbursement is a rather complicated process.
Here are 10 things pain management physicians needs to know about opening an ASC.
1. Performing an initial financial feasibility analysis is critical. Before making any decisions on whether to proceed with developing an ASC, pain management physicians should first perform a financial feasibility analysis to determine whether it makes sense to proceed with opening an ASC.
This analysis should look at whether there is likely to be enough procedure volume to justify the investment in building the facility. The analysis also needs to include an impact analysis on the practice revenue as there is often a reduction in professional fees if a payor also has to pay facility fees (which it would to the ASC). Considering the many variables physicians will need to take into consideration, as will be discussed throughout this piece, it may be worthwhile to bring in an expert to oversee the analysis or at least provide guidance on how to properly and accurately perform this analysis.
2. There's no 'easy route' for opening an ASC that performs procedures, even those not requiring general anesthesia. An ASC that will perform procedures requiring local or mild to moderate sedation that plans to bill third-party payors needs to have an ASC license and receive certification from CMS. Therefore, physicians planning to perform pain management cases need their ASC to meet the same requirements as someone performing orthopedic or general surgery procedures.
3. Certificate of need: yes or no? You need to check if your state requires a certificate of need (CON) or some sort of state approval to construct. According to the National Conference of State Legislatures, about 36 states retain some type of CON program, law or agency as of December 2013. The application and approval process to obtain a CON can add months to your planning and thousands of dollars to your budget.
4. Opening an ASC requires more than just acquiring a license. Most offices are not in a position to simply apply for and acquire a license to operate an ASC in their existing space. There are many rules tied to receiving a license to open and operate an ASC, including the need for an ASC and office to run as distinct facilities separated by a firewall.
5. Construction of an ASC isn't an easy or fast process. The time required to build an ASC is dependent upon multiple factors, including whether the surgery center is a new build or renovation of an existing space. Physicians should expect at least a 6-12 month process, if not longer.
Also, don't plan to use the same architect who built your office (or, worse, your home). ASC facility requirements and codes are very different from medical offices. You need to bring on someone who has designed, built and successfully licensed ASCs in your state. We have had clients discover they need to tear out walls, add plumbing or upgrade HVAC systems at the eleventh hour because their architect wasn't well versed on designing ASCs.
6. Building codes must be taken into consideration. Although building code laws between the different states are similar, there are usually at least a few different requirements per a particular state's department of health. The ASC's design must be in compliance with all appropriate building codes on the local, state and federal level.
7. It takes time to complete applications and receive licenses. In most states, initial plan designs for an ASC requires approval by the state's department of health. The timing of the review may depend upon the state's schedule and availability of personnel to review architectural plans and applications.
Many of the required licenses, certifications and waivers (such as DEA, CLIA, state and CMS) are interdependent (i.e., you have to have one in place to apply for another), so the timing of submission is critical and approvals often take longer than one may think. Add in state and federal holidays, government budget cuts and freezes and the you timeline can be pushed out months.
8. Several surveys are likely needed upon occupancy. Surveys conducted by CMS, the state and accreditation organizations (if applicable) occur after occupancy of the ASC to ensure all regulations and standards are met and the facility is equipped to allow physicians to perform procedures in a safe environment. Note: In an ASC, accreditation is required by most private payors. So even if you aren't planning to bill Medicare, you may still need accreditation by CMS to bill insurance.
9. Coding, billing and managed care contracting in ASCs is a very different animal. While you may hope to have existing business office staff handle your new ASC's coding, billing and contracting efforts, that may not be easy as these processes in an office are quite different than they are in an ASC. Existing office staff may require extensive training to understand how to properly code, bill and negotiate contracts for ASC procedures. Many ASCs outsource their coding, billing and payor contracting for these reasons. If you plan to outsource, find a company with experience contracting and billing for pain management.
10. Joining forces may be a good idea. It is often difficult for a solo practitioner to perform enough pain management procedures to offset the high costs involved in opening and operating a freestanding ASC. But bring several busy pain management physicians together for one ASC project and facility can be quite profitable.
Partnerships have their challenges and those need to be addressed early on, but the key issues, such as who owns how much of the ASC, what block times does everyone receive, how can a partner be bought out, can all be worked out. We have seen competitors come together and join forces on successful surgery center projects. Also, keep in mind that if you aren't limited by a CON to be a single-specialty ASC, you can bring in other specialists to your ASC to use and/or invest in the ASC to help contribute to the bottom line. Just make sure their equipment and supply costs are evaluated in your projections.
Joan Dentler (jdentler@avanzastrategies.com) is president and CEO of Avanza Healthcare Strategies (formerly ASC Strategies), which provides healthcare organizations with strategic guidance, with a focus on outpatient services and population health management. For more than 25 years Ms. Dentler has been consulting on, developing or operating ambulatory surgery centers, hospital outpatient services and community health initiatives.
Sarah Gamerman (sgamerman@avanzastrategies.com) is a senior consultant for Avanza Healthcare Strategies. Sarah has worked closely with ASCs and hospitals, taking them from ground breaking through licensing, Medicare certification and accreditation.