Orange County’s outpatient surgery centers could see some changes if federal regulators have their way.
The Centers for Medicare and Medicaid Services is considering a rule that would expand the list of surgeries that it would pay for when done outside a hospital.
There’s a caveat: regulators want to tie some of those rates more closely to those paid to hospitals.
In some cases, that could boost payments for surgery centers. It could cut them in others.
Cost Concerns
Federal officials have said they want to end payment differences that “inappropriately favor one outpatient setting over another and that may add to Medicare costs.”
Getting a handle on Medicare is critical for the federal government as the first baby boomers turn 65 in 2011, just five years from now.
If the rule is adopted, all ambulatory surgery centers could be affected, including those owned by hospitals.
Local surgical center officials have mixed opinions on what could happen.
“On most procedures that we do in our centers, Medicare actually pays hospitals considerably more than they pay surgery centers,” said Jeremy Hogue, chief executive of Sovereign Healthcare Inc., a Newport Beach company that runs six outpatient centers, including the Newport Plaza Surgery Center.
Larger payments cover specialties such as orthopedics and urology, Hogue said. Payments for eye and gastrointestinal surgeries are equal, he said.
“We may not see a hit like some people are talking about,” Hogue said. “The second thing is that it sort of balances itself out by the fact that we have more procedures that we can do.”
Trends in the outpatient surgery sector are “still incredibly strong,” he said.
Some Cautious
Others are more cautious.
The proposal “makes some sense, in that there will be an increased number of procedures allowed (in an outpatient facility),” said Stan Otake, a Seal Beach-based consultant for surgery centers. “But, at the same time, it’s nothing that providers (and) facility operators are jumping up and down about. Because the maximum reimbursement is anywhere from $1,200 to $1,600 for the most complex surgical cases.”
Surgical center operators could receive as much as $15,000 for a complex procedure from a private insurance company, Otake said.
A Benchmark
About a third of surgical center procedures are tied into Medicare patients, Otake said. But the rules are more important than that: Medicare and Medicaid are benchmarks that private health insurers use to set their rates.
If the changes are made, surgical centers could have to perform more surgeries since Medicare’s nine pay categories aren’t particularly profitable, Otake said.
Surgical centers have grown as a less expensive way overall to treat some patients.
Figures from the American Association of Ambulatory Surgery Centers, a trade group, show that Medicare-certified facilities have grown from just some 400 in 1983 to more than 3,700 today.
Industry observers chalk up the growth of surgical centers to patient convenience, cost advantage over hospitals and financial incentives for doctors.
“Doctors can be legal owners of surgery centers and they can refer their patients to a facility in which they have a financial ownership interest in,” Otake said.
The key, he said, is having doctors who know which patients should be referred to outpatient surgical facilities.
“So if you have a private insurance plan versus a state-sponsored patient, the reimbursement from a private insured patient is going to be a lot greater than that of a government payer or a cash patient,” Otake said.
“So if I’m a surgeon, I would know which patients to bring to a facility in which I have an ownership interest and which ones to take to a hospital at which I have privileges,” he said.
Who Would Benefit
The rule change also is seen as benefiting centers that perform a wider range of services rather than single-specialty ones.
Surgical centers that concentrate on one specialty are profitable because they get payments that are close to hospital rates, though they spend much less on overhead. The rules will close those loopholes.
