Andrew Hayek, president and CEO of Surgical Care Affiliates and chairman of the ASC Advocacy Committee, discusses five key ways the healthcare reform law will affect ASCs.

1. New payment formula results in flat reimbursement. CMS will begin applying a new mechanism, the "productivity adjustment," that will reduce annual payment updates for most healthcare providers. This mechanism goes into effect for ASCs in 2011, and it will reduce future annual updates by an estimate of labor productivity improvement in the general economy, generally one to two percent. For 2011, ASCs would have received a 1.6 percent update, based on the consumer price index, but the "productivity adjustment" is also 1.6 percent, resulting in no update. This new mechanism, which applies to many categories of healthcare providers, will keep Medicare reimbursement roughly flat for ASCs each year into the future.

2. Colonscopy coinsurance waiver ends incentive for low-cost care. Medicare patients will no longer pay co-insurance for screening colonoscopies, a step meant to encourage more preventative care. While this is positive overall for ASCs, the waiver also applies to hospital outpatient departments. It effectively eliminates the patient’s incentive to seek lower-cost care by choosing an ASC rather than a hospital outpatient department.

3. Payment will eventually be tied to quality measures. HHS has been directed to create a plan to implement for ASCs by the end of 2011 a system of "value-based purchasing," also known as "pay for performance." The ASC Advocacy Committee and the ASC Quality Collaboration (ASCQC) will work with Medicare in formulating these measures. The industry has already begun voluntary reporting quality measures through the ASCQC, which has received approval from the National Quality Forum for six quality measures for ASCs. Around 1,200 ASCs are reporting on these six measures, and the results are published quarterly at www.ascquality.org. Generally, the expectation is that Medicare will use the ASCQC’s work as a starting point for its value-based purchasing plan.

4. ACOs may benefit surgery centers. Most of the structure and processes for accountable care organizations still needs to be worked out, but the central premise of ACOs is clear: to reduce cost while improving quality. Because ASCs are currently paid 42 percent less than the HOPD rate – and the difference rises to 44 percent next year — ACOs have an incentive to shift surgical volume from the HOPD setting to surgery centers as a way to create cost savings and trigger incentive payments to ACOs.

5. New Payment Advisory Board could favor ASCs. The new Independent Payment Advisory Board will have broad authority over Medicare payment and policy, and its mandate is to dramatically reduce the rate of growth of Medicare cost. "Implementation of the board in the next several years will create significantly even more downward pressure on reimbursement generally throughout the healthcare system," Mr. Hayek says. "This will give the ASC industry the opportunity to demonstrate that it provides outstanding clinical quality at a lower cost. Therefore, the best payment policy is to encourage more migration of outpatient surgical cases from the HOPD setting to the ASC setting."

Learn more about the ASC Advocacy Committee.

Learn more about the ASC Quality Collaboration.

Click here to read the article in Becker's ASC Review.