Retina Ambulatory Surgery Center Myths Debunked

PRAVIN U. DUGEL, MD · MICHAEL A. ROMANSKY, JD · STEVE CHARLES, MD

Recent technological advances in microincisional surgery, combined with favorable governmental changes in reimbursement, have focused the spotlight on retinal ambulatory surgery centers (ASCs). As recently as 5 years ago, fewer than 5% of vitreoretinal surgeries were being performed in ASCs. However, the most recent American Society of Retina Specialists preferences and trends membership survey shows that almost 33% of vitreoretinal surgeries are currently being performed in ASCs. The most recent Centers for Medicare and Medicaid Services (CMS) payment regulation, released in July 2007 and effective for services furnished as of Jan. 1, 2008, anticipates a 25% migration to ASCs over the next 2 years for all surgeries. Clearly, there is a trend toward ASCs. However, many myths and misconceptions remain. This article attempts to address some of those myths and misconceptions, particularly as they apply to vitreoretinal services.

MYTH #1: ASCS ARE FOR "SURGERY ON THE CHEAP"

In the early 1970s, pioneer surgeons embraced the notion that the ASC was an appropriate site for surgery, not to duplicate the hospital surgical unity but to improve on the patient's surgical experience. They felt that the ASC would provide the very highest in specialized quality care in an accessible and friendly environment and at a cost that was lower to both the patient and the payor, which, in the case of ophthalmology services, was primarily the federal government. These visionaries have set the standard for ASCs through the development of supporting organizations such as the American Association of Ambulatory Surgery Centers, the Federated Ambulatory Surgery Association, and the Ophthalmic Outpatient Surgery Society (OOSS). These ASC organizations are robust in upholding the founding standards, as well as lobbying for political change. The leaders of these organizations are some of the most passionate and convincing lobbyists in Washington.

The Medicare certification requirements imposed on an ASC are virtually identical to that of a hospital outpatient department (HOPD). In addition to the above-mentioned Medicare requirements, many opt to obtain accreditation by a CMS-approved accreditation organization, such as the Accreditation Association for Ambulatory Health Care or the Joint Commission on Accreditation of Hospitals, whose standards meet or exceed the Medicare program.

Despite these founding standards, support and lobbying organizations, and credentialing agencies, the ultimate quality and delivery of care for an ASC lie with its owners. As physicians and surgeons, we have many requirements and credentialing standards; however, as there are careful surgeons and careless surgeons, there are also ASCs of high standards and, unfortunately, some of inferior standards as well. It is important to state that a vast majority of ASCs abide by the highest standards to provide the best in quality of care to patients.

The notion that, in order for an ASC to survive or be profitable, shortcuts need to be taken, such as disposable instruments being reused and sutures being autoclaved, is unequivocally false. Although rare examples of such behavior may exist, it is important to realize that three-quarters of the overhead for an ASC is spent on personnel, and the percentage of the ASC overhead spent for disposable instrumentation in vitreoretinal surgery is less than 5%. Therefore, the sustainability and profitability of an ASC has very little to do with providing the very best equipment possible to the surgeon and has more to do with utilizing the supporting staff efficiently. Therefore, there is no business excuse what-soever for utilizing substandard equipment or supplies. Indeed, a well-run, efficient ASC should provide quality care that strives to be superior to that in a hospital setting.

MYTH #2: ASCS ARE SUITABLE FOR EVERYONE

While ASCs may represent a new trend in providing safe, efficient surgical care, this mode of delivery of surgical care is not suitable for everyone. In evaluating the ASC option, personal as well as practice pattern questions need to be answered honestly and thoroughly. The use of the ASC requires a shift in attitudes ingrained in us through years of training and subsequent hospital-based surgical practice. The following fundamental principles must be embraced: (1) You must believe the ASCs embody the potential of providing better patient care than current hospital-based facilities; (2) While valuing efficiency, you must recognize that speed and efficiency are not synonymous; and (3) You must be open-minded as technology evolves to allow for more efficient surgery.

At this point, it is important to stress the difference between speed and efficiency. Speed simply involves the duration of surgery. It is a factor in the calculation of efficiency, but it should not be determinative. Efficiency, in our opinion, involves the more important measure of quality patient-care delivery and improved outcome.

Once the above personal questions have been addressed, the more global practice-related implications must be considered. The lifeblood of a retinal consultancy practice is the referral network. If building an ASC or aligning with an ASC might damage the existing referral network, it should not be considered. Fortunately, however, several approaches to migrating the surgical practice to the ASC might enable the referral network to be protected. We will consider some of these avenues:

► A freestanding retina-only ASC. Until recently, this option was not financially practicable. However, technological advances and changes in reimbursement have allowed this option to be viable for large retina groups or for various smaller retina groups partnering to create an ASC. The obvious advantage of this focused, specific option is that it has the potential of providing the most efficient care. It will have staff and facilities designed to perform vitreoretinal surgery only and presumably have the leverage to obtain the very best equipment available. It also has the advantage of not offending general ophthalmologists and optometrists by aligning with competing referral sources and being viewed as an independent center for excellence. The disadvantages are that it lacks diversity and may become financially challenged if retinal reimbursements were to decline.

► A freestanding ophthalmic-only ASC. The advantage of forming a freestanding ophthalmic ASC that includes vitreoretinal surgery is that it allows for diversification while maintaining a narrow focus on ophthalmology alone. This provides some protection in case reimbursement regulation should change for a particular subspecialty, such as vitreoretinal surgery or, for that matter, any subspecialty service. It also provides potential for significant efficiency by focusing on ophthalmology alone. Moreover, if other owners are strategically selected, this arrangement also solidifies a referral network that may prove beneficial in the future. The main disadvantage is in selecting some general ophthalmologist to the exclusion of others and thereby alienating referral sources. Like the vitreoretinal-only ASC, a freestanding ASC also requires a significant capital investment.

► Joining an existing cataract-based ASC. This option has the advantage of aligning with an ASC that is presumably already efficient and successful and, therefore, does not have the growing pains of a new business. It also has the advantage of a relatively low initial capital investment and low risk. However, disadvantages include alienating other referral sources and potentially having less investment share in this existent business than one developed from ground zero, such as the 2 options above.

► A hospital joint venture. This is an attractive option for a practice that is closely aligned to a hospital. Some practices are historically identified with a hospital, and this forms the basis for their referral network. This option allows that network to be maintained and for the hospital identity to be preserved while allowing for the advantage to the physician of owning and utilizing an ASC. However, this venture should be directed and managed by the vitreoretinal surgeon. A comprehensive and realistic pro forma should be presented to the hospital chief executive officer or chief financial officer, showing the advantages of moving vitreoretinal surgeries away from value inpatient surgical units to a more efficient outpatient unit. Often hospital by laws will require the hospital to own the majority of such a joint venture. However, if the physician or the physician group can manage and operate the ASC, the hospital may allow it to be managed as a separate and independent entity. This venture also has the advantage of involving a potentially smaller initial capital investment. However, the relationship with the hospital may be problematic, as the new facility will preferably be managed with efficiencies that hospitals may not be equipped to implement. Although the hospital may have majority ownership, it should allow the ASC to run as an independent profit center. The hospital ownership could also discourage a third-party purchase of this business. One of the substantial advantages of the above physician-owned options is that, as the business succeeds, equity is built, and there is the potential of selling the ASC to an independent entity, such as a management company or hospital.

Each option that requires the development of a free-standing center encompasses the expenditure of significant resources. The promoter of the venture will need to assemble a team of accountants, lawyers, contractors, equipment specialists, and nursing managers. Without the proper commitment in time and effort, the ASC project can fail miserably. A popular alternative is to employ a management company that may gather or already have under its umbrella a group of such expert consultants. Employing such a company is much like employing a contractor to build a very expensive house: It is a leap of faith. It behooves the vitreoretinal surgeon to conduct comprehensive due diligence, interview various management companies, and then request a referral.

In summary, an ASC is not for everyone. The first step is personal introspection, and the second is a global review of the practice and its referral patterns. The time and effort it takes to acquire an ASC relationship should not be underestimated. This commitment must be serious and preplanned. However, the reward is well worth the toil.

MYTH #3: I WILL WAIT FOR BETTER ASC REIMBURSEMENT

Under current law, CMS pays for more than 2500 surgical procedures performed on the ASC-approved list on the basis of a simple fee schedule comprised of 9 prospectively determined payment rates, ranging from $333.00 to $1339.00. For the past 25 years, the ASC community has been frustrated with the inability of CMS to capture and adequately value ASC facility costs and establish fair reimbursement rates. For the past decade, OOSS and other ASC trade groups have pressed Congress and CMS to mandate the establishment of a new payment system under which ASCs and HOPDs are linked. Michael Romansky, JD, championed this notion for OOSS. He stated that this provided a number of potential advantages to a system under which ASCs are paid hospital rates, minus a discount: "First, virtually all HOPD rates are higher than those paid to the ASC. Second, hospital costs and charge data are much more accessible and accurate than those which the ASCs are capable of generating. Third, hospitals enjoy annual payment updates, while ASCs have rarely received them. Fourth, ASCs would be entitled to the same additional payments that hospitals receive — for instance, for costly and innovative medical devices. Finally, under a system linked to hospital rates, the ASC and hospital communities would have the same incentive — to increase base facility fees, enabling ASCs to ride on the coattails of the more extensive and better financed hospital lobbying effort."

On July 16, 2007, CMS issued its final regulation establishing a new payment system for ASCs that will become effective on Jan. 1, 2008, as well as a proposed rule governing 2008 payments for HOPDs. This represented a landmark in CMS's view of the value and potential of ASCs in providing future surgical services. It is crucial that vitreoretinal surgeons understand the implications of this seminal change.

First, virtually every ophthalmic surgical procedure can now be performed and paid for in the ASC. Second, as recommended by the ASC community, ASCs will be reimbursed at approximately 65% of the rates paid to HOPDs. This conversion factor will vary from year to year depending upon multiple factors. Importantly, almost all ophthalmic surgical procedures will receive increases above the 2007 rates, plus inflation updates at the Consumer Price Index-Urban (CPI-U) rate, commencing in 2010.

In 2008, the ASC payment rates will represent a blended amount equal to 75% of the applicable calendar year 2007 payment rate and 25% of the applicable calendar rate 2008 payment rate. By 2011, the new ASC payment system will be fully implemented. This has the effect of slowing down the rate increases in payment for some services, especially vitreoretinal surgery, as well as the rate of decreases in other services, such as YAG posterior capsulotomies. This will also allow a sufficient amount of time for ASCs to adjust to the new CMS regulations.

Despite the significant benefits for ASC-based procedures and the new CMS regulation, some shortcomings remain. First, the ASC community believes that the ASC conversion percentage should be increased from 65% to 75%. Second, ASCs should receive the same annual adjustment as hospitals are afforded, ie, the Hospital Market Basket, which is typically a point higher than the CPI-U. Third, ASC interest groups and manufacturers of medical technology are concerned that under the new payment system, ASCs, now subject to an anticipated 35% discount below HOPD rates, will not be able to offer many services because costly devices and implants will certainly not, in turn, be discounted 35% by suppliers.

Notwithstanding the shortcomings of the rule, it is crucial that vitreoretinal surgeons understand the significance of this landmark ASC payment regulation. Although some shortcomings remain, vitreoretinal surgeries stand to gain an increase of 110% to 120% in reimbursement.

MYTH #4: I CAN ONLY DO "EASY" CASES IN AN ASC

For the last 15 years, co-author Pravin U. Dugel, MD, has treated virtually all patients, except for children and medically unstable patients, in an ASC. The notion that only easy cases can be done in an ASC is false. Some of the most difficult vitreoretinal surgical procedures requiring innovative instrumentation, multiple adjuvants, and expert ancillary help are most efficiently done in ASCs. The complexity of the surgery does not determine whether a patient is suitable for an ASC. Instead, the medical stability of the patient determines this. This is best evaluated by an anesthesiologist.

At the Spectra Eye Institute, we use 5 board-certified anesthesiologists who do a thorough presurgical evaluation and determine the medical stability of the patient. The anesthesiologist alone, not the surgeon, determines whether the patient is suitable for surgery in the ASC. We have recently evaluated the medical records of all patients seen at the Spectra Eye Institute for vitreoretinal surgery for the last 2 years. Out of more than 1600 patients, 5 patients were cancelled by the anesthesiologist prior to surgery for medical reasons. No patient required conversion to general anesthesia, and in no case was a patient's surgical procedure prematurely aborted for medical reasons. In summary, surgery of all levels of complexity may be done at an ASC. Only children and medically unstable patients may need to be done in a hospital setting. A board-certified anesthesiologist should determine the suitability of the patient to have surgery in an ASC based on a thorough presurgical evaluation. In fact, patients requiring complex vitreoretinal surgery may benefit most from the expertise provided by an ASC.

MYTH #5: I HAVE TO BE FAST TO WORK IN AN ASC

It is important to reiterate what was stated earlier: Speed is simply a small component of efficiency. What we strive for in an ASC is efficiency, not speed. We welcome many visitors at the Spectra Eye Institute. We tell all our visitors that we pride ourselves on our surgical efficiency, not on our speed. We divide every phase of the patient's experience from the time of check-in to the time of check-out. The actual surgical time is actually a very small part of the total timeline. We treat the surgical time as an untouchable event. This is a time that the doctor should take his or her time in making sure that the patient receives the very best care possible. However, we make sure that the efficiency derives from the staff, who check in the patient, transfer the patient to the holding area, do the preoperative evaluation and dilate the patient, turn over the room, and then postoperatively accept the patient and instruct the patient about postoperative care and the postoperative appointment prior to discharge. No physician should ever feel rushed during surgery. However, having said that, as mentioned in Myth #2, choosing a physician who values efficiency and is willing to be open-minded as technology evolves is key.

MYTH #6: IF I INVEST IN AN ASC, I RISK VIOLATING ANTI-KICKBACK LAWS

A thorough discussion of anti-kickback laws is beyond the scope of this article. However, it is crucial to understand the fundamental concepts of these laws. Although violation of these laws could constitute a federal crime, clear standards have been set to avoid any confusion. This is known as safe harbor regulations. If the ASC meets the well-defined safe harbor standards, it is immune from challenge under the federal anti-kickback law. This is what every ASC should strive to attain. The most important element of the safe harbor standard is that the investor provide the surgical service to the patient he is referring to the facility. This standard would not be met by nonsurgeons or by surgeons who do not use the facility. For instance, family members and referring optometrists would likely not meet the standard and, therefore, not be eligible for safe harbor treatment. However, the failure of the ASC to achieve safe harbor status does not mean the venture is illegal or even suspect — just that it is potentially subject to more scrutiny by the federal authorities. If you do consider such an arrangement that will take you out of the safe harbor standards, a very competent healthcare lawyer should be retained.

MYTH #7: ASCS ARE ALWAYS A GREAT INVESTMENT

The primary reasons to consider an ASC are, in this order of importance: Improved patient care, access, and convenience; better physician lifestyle; and profitable investment. As mentioned in Myth #2, the vitreoretinal surgeon must be convinced that an ASC will provide superior patient care prior to considering the other 2 factors. Certainly, as a secondary factor, the surgeon will realize an improvement in lifestyle. No longer should turnover times be greater than the surgical time. No longer should the surgeon have to perform complex surgeries with substandard equipment. No longer should the ancillary staff be an impediment as opposed to an asset in achieving more efficient patient care. No longer should vitreoretinal surgical cases be canceled or postponed for other nonophthalmic emergencies. This will provide for more efficient surgical block time and more predictable and consistent time with family and friends.

The investment value of an ASC is more tricky. As with stocks, the more risk, the more potential reward. Options involving a joint venture with a hospital or joining an existing successful ASC provide less risk but may also provide limited investment reward as third-party buyouts would be less likely and the facilities may operate less profitably. The potential ASC developer might realize greater short- and long-term profits; however, he or she must appreciate that involvement in an ASC from the ground floor requires significant dedication of capital and "sweat equity."

CONCLUSION

Given changes in technology and reimbursement, the migration of vitreoretinal surgery from the hospital to the ASC is inevitable. Studies have shown that ASCs are safer and less expensive for patients and the government. We wholeheartedly believe that ASCs have the potential of providing the very best in surgical patient care. CMS has realized the value of ASCs, and its new payment program will facilitate the migration of vitreoretinal surgery from the HOPD to the ASC. Although the time and effort in developing or otherwise pursuing options to perform surgery in an ASC may be considerable, the progressive surgeon may well enjoy the reward of scoring a trifecta in the delivery of vitreoretinal surgical care: enhanced quality, improved practice style, and financial remuneration. RP