Hospital Killing Provisions Of 21st Century Cures Act Boost Physician Entrepreneurship
Yes, there is a Santa Claus.
Oh, sorry for the typo. I meant Santa Clauses as in the two major pro-physician provisions of the 21st Century Cures Act, enacted in December by Congress and signed in to law.
Although coverage in the popular press centered on the Cures Act’s primary focus, medical research, innovation and acceleration of the FDA’s drug approval process, the Act contains two Medicare-related provisions of the utmost importance to physicians and their owned facilities.
Those same two provisions are additional nails in the coffin of traditional, bloated hospitals.
The Cures Act requires the Department of Health and Human Services (HHS) to create a searchable website allowing the public to compare estimated Medicare payments for various procedures under each of the outpatient department fee schedule (i.e., the payment HOPDs receive) and the ambulatory surgical center payment system.
Importantly, the Act also requires the website to show the estimated Medicare beneficiary liability, the patient’s out-of-pocket costs assuming no supplemental insurance, for those same procedures.
With limited exceptions beginning in 2017, Medicare pays in excess of 50% more for procedures in an HOPD than it does in the ASC setting. Outpatient procedure are Medicare Part B services, covered only as to 80% by Medicare meaning.
As a result, Medicare beneficiaries almost always have greater out-of-pocket costs for the same procedure performed in an HOPD as opposed to in an ASC.
The impact of the Care Act’s price transparency will be that patients will clamor for their procedures to be performed at an ASC. Even if they’re not interested in protecting Medicare’s pocket book, they’ll be motivated to reduce their own out-of-pocket expenditures.
Private payors are likely to follow this same transparency trend, accelerating the already existing flow of commercial cases from hospitals to ASCs.
At the risk of losing patients, physicians wishing to retain an outpatient surgery caseload should shift their work from the HOPD setting to ASCs. That’s the case for both surgeons and for some hospital-based physicians such as anesthesiologists and radiologists.
In addition this signals the growing financial benefit from forming new ASCs to profit from outpatient procedures.
As technology continues to advance and CPT codes allowing ASC billing catch up to that reality, the independent outpatient business will become even more profitable.
Ending Physician Payment Disincentives
The second ASC-focused issue in the Cure Act facilitates the fiscal benefit to Medicare of shifting cases out of HOPDs to ASCs.
At issue was existing law pertaining to the use of “certified electronic health record technology,” referred to as certified EHR or “CEHRT,” that required physicians to use CEHRT for a minimum percentage of patients or suffer cuts in their Medicare reimbursement. Former law did not empower HHS to certify EHR platforms for the ASC setting. Accordingly, cases performed in an ASC would count against the minimum CEHRT percentage.
The Act authorizes HHS to certify EHR for the ASC setting, removing the payment disincentive for physicians who perform cases at an ASC.
The Bottom Lines For You
1. Patients will have financial information that compels them to have outpatient procedures in ASCs, not HOPDs.
2. Physicians’ incomes will not suffer as a result of performing cases in ASCs as opposed to at hospitals.
3. Hospitals are getting sicker and the Cures Act is simply more of what ails them. Approximately 70% of an average acute care hospital’s income comes from outpatient procedures and these procedures are streaming out the door to non-hospital facilities. (To learn more, download a complimentary copy of my book, The Impending Death of Hospitals, or, if you’d like it in hard copy, purchase it on Amazon.
4. Physician practices dependent upon hospitals must make strategic decisions, now, for your own future.
5. Physicians should immediately investigate whether ASC formation makes sense for you. (We’ve established a strategic alliance with HDA Enterprises, Inc., one of the nation’s most experienced and successful developers and managers of physician-owned outpatient facilities. Contact me immediately if you’d like to arrange for them to provide you with a complimentary initial analysis of how profitable an ASC will be for you.)