With pressure to reign in rising healthcare costs and value-based, alternative payment models rapidly gaining traction, can changes in reimbursement for the ophthalmic ASC be far behind?

“Higher-quality healthcare at a lower cost is not a fairy tale; it is already happening in many ways,” says Kevin Corcoran, COE, CPC, CPMA, FNAO, of Corcoran Consulting Group, which represents more than 6,000 ophthalmologists across the country. “People who believe that it will be fee-for-service forever will be surprised and chagrined by the evolution of healthcare payment methods, particularly within Medicare Advantage (Part C Medicare).”

For industry observers, such as Corcoran, the writing is already on the wall — and as large as a freeway billboard despite the ophthalmic ASC’s ability so far to remain solidly fee-for-service and unaffected by the federal Merit-based Pay System (MIPS) and Alternative Payment Models (APM) born of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Lobbyists for ophthalmic medical societies are digging in for a fight.

Says Nancey McCann, director of government relations for the American Society of Cataract and Refractive Surgery (ASCRS), “We at ASCRS and in conjunction with our coalition have been advocating for the preservation of a viable fee-for-service option because there are no alternative payment models for ophthalmology at this time.”

Even so, advocates of fee-for-service also acknowledge that the pressure is building for ophthalmic ASCs to plan for and adapt to the value-based initiatives that are already in use among physicians’ practices and hospital systems. That includes improving cost accountability, reporting outcomes, measuring patient satisfaction, and positioning their surgery centers to bid aggressively for large insurance contracts — potentially competing with their peers for patients.

“All roads lead toward value-based care and value-based payment. I don’t think that any site of care is going to be left out of this movement,” says Danielle Lloyd, senior vice president for private market innovations and quality initiatives for America’s Health Insurance Plans.

“Even if the direct reimbursement from commercial insurers to ASCs does not change, the steady march toward the assumption of risk by provider groups for the total cost of care will change the market dynamics.”

Those who argue that value-based reimbursement is coming sooner rather than later cite these indicators:

• Health and Human Services Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, have come down hard on the side of value-based reimbursement and Medicare Advantage expansion.
• Value-based healthcare programs have bi-partisan support in Congress — a rarity — even if implementation has been slow and goals remain elusive.
• Medicare Advantage enrollment is increasing steadily, along with attendant pressure from insurers on providers to negotiate rates.
• Commercial insurers and some large self-insured corporations are adapting alternative payment models at an increasing rate and negotiating bundled payments to control costs for numerous surgical procedures.

More recently, and directly pertinent to the ophthalmic ASC, the Medicare Payment Advisory Commission (MedPAC) recommended unanimously this year that Congress require ASCs to report cost data in 2020. Changes to the 2019 MIPS requirements for cataract surgeons initiate a new episode-based cost measure for routine cataract surgery with an IOL, which factors into the overall score, upon which bonuses and penalties are based. While Congressional action on the MedPAC recommendation is unlikely and the MIPS requirements don’t pertain directly to ASCs, both actions move the needle closer to hospital-like reporting requirements for the ASC, industry observers say.

“The chatter in Washington continues to be trying to find a means to decrease the cost of Medicare,” says Allison Shuren, a Washington, D.C.-based health regulatory expert with the international law firm of Arnold and Porter. “Certainly, this administration is very focused on that.”

At the same time, some Washington observers say politics, combined with the unwieldly nature of government bureaucracy, make wholesale changes for Medicare fee-for-service reimbursements unlikely in the short term.

“As a practical matter, you aren’t likely to see major changes in the way that surgery centers and physicians are compensated (by Medicare) in the next 3 to 5 years,” says Bruce Maller, founder and CEO of healthcare consulting firm BSM Consulting.

Michael Romansky, JD, counsel for the Outpatient Ophthalmic Surgery Society, concurs, and sees substantive change coming more quickly from the private sector than from Medicare.

“Commercial payers are way ahead of the federal government in seeing the value in value-based purchasing,” says Romansky.

The $3.65 Trillion Question

At the heart of every argument for value-based reimbursement are the numbers — eye-popping and, by all accounts, unsustainable:

• $3.65 trillion in healthcare spending in 2017, more than $10,700 for every man, woman, and child in the U.S.¹
• Almost 18% of GDP spent on health care in 2017², more per capita than any other developed nation and twice the total GDP of Brazil, the second-largest economy in the Americas.³
• 4.4% increase in the cost of health care in 2018, more than twice the rate of inflation.³

Added to the escalating costs is the burgeoning number of Medicare beneficiaries, up from 39.2 million in 2000⁵ to almost 60 million in 2018⁶ — and projected to increase to more than 80 million by 2030.⁷

Meanwhile, the Social Security and Medicare Boards of Trustees projected in their 2019 annual report that the Hospital Insurance Trust Fund — which supports Medicare Part A — will be depleted by 2026.⁸

“There is going to be an economic imperative for the health system as a whole to restrain cost, and everybody is going to be doing it,” explains Stephen C. Sheppard, CPA, COE, managing principal of the Medical Consulting Group. “It may get to cataract surgery last, but if this isn’t on your radar, you’re fooling yourself.”

Defining Value

At its simplest distillation, as defined by Harvard Professor Michael Porter, value equals patient health outcomes per dollar spent. By these measures, the current U.S. system fails miserably with higher costs² and worse health outcomes than its economic peers.⁹

Fee-for-service gets the bulk of the blame.

“For as long as I’ve practiced, you always got paid for providing service. It didn’t matter if that service did anybody any good, you still got paid for it,” says Ellis “Mac” Knight, MD, senior vice president and chief medical officer of the Coker Group, a healthcare advisory firm based in Alpharetta, GA. “The perverse incentives that are inherent in the fee-for-service system are part of the reason we’ve gotten into this situation.”

Value-based reimbursement is meant to be the antithesis of the pay-for-play ethos of fee-for-service. Put simply, value-based reimbursement measures both expenses and outcomes with the goal of generating the highest quality for the lowest cost. How the government defines — and attempts to measure — value, and how the private sector approaches the same issue, however, are dramatically different.

The federal MIPS and APMs programs launched under MACRA in 2015 thus far have been used primarily by physicians and hospital networks. The MIPS program for Medicare providers, which critics claim is just fee-for-service with bonuses or penalties, works like the grade curve in Organic Chemistry. Those who have the best numbers get the bonus or the A; those who have the worst numbers are penalized. One problem with applying the MIPS methodology to cataract surgery, with its high favorable outcomes and low complication rates, is that, unlike in Organic Chemistry class, almost everyone is already making an A or, at worst, a B+.

“You might be talking about two cases of TASS out of thousands of surgeries,” says Sheppard. “The differences are statistically insignificant.”

Moreover, critics say, MIPS in its current incarnation focuses primarily on reporting requirements and does little to improve patient care.

“What is value?” asks Albert Castillo, CEO of the San Antonio Eye Center in Texas. “Is value checking a box saying that you did something? Or is it making sure that patients have good outcomes?”

Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, a national policy center based in Pittsburgh, agrees.

“People have the notion that value-based payment means giving the physician a bonus or a penalty based on whether the physician has a higher or lower infection rate than other physicians,” says Miller. “However, what matters to the individual patient is not the surgeon’s overall infection rate, but whether that patient got an infection and had to pay more to have the infection treated.”

Miller says that in true value-based payment models, providers should be paid adequately for preventing complications and then should be responsible for the cost associated with treating complications when they occur — not the patients or the payers.

“If it’s truly value-based, there has to be both an adequate payment to enable a good outcome and accountability for achieving that outcome,” says Miller. “If you pay more for doing the surgery the right way, and you don’t pay for complications, the surgeon is rewarded for reducing complications, which is the way it should work. That’s the opposite of the way it is now with fee-for-service, in which payments are often inadequate to support high-quality care, and more complications result in more payments.”

On the cost side of the equation, industry advocates argue that the ASC is already substantially less expensive than hospital settings and that cataract surgery is a fairly low-cost procedure, especially compared with joint and cardiac surgeries. Nevertheless, the sheer volume of cataract surgeries makes the procedure a target. In announcing the 2019 cost-based MIPS for cataract surgeons, CMS noted that Medicare spends more than $3.4 billion annually for cataract removal with IOL, the most common surgery in the U.S.¹⁰

“There aren’t a great deal of savings to obtain from cataract surgery, except in site of service,” says McCann of ASCRS. “It’s frustrating. They should focus on areas where there needs to be improvement in outcomes and cost savings, and that would be in the chronic disease area.’”

Alternative Payment Models

The private sector’s spin on value-based healthcare is evolving and open to interpretation by providers and payers involved in negotiations, but participation in Alternative Payment Models is growing across all platforms.

A 2018 report released by the Health Care Payment Learning and Action Network, which is supported by major insurance companies, found that 34% of all healthcare payments made in 2017 and almost 50% of Medicare Advantage revenue flowed through alternative payment models, such as Accountable Care Organizations (ACOs), capitation, bundled payments, and medical homes.¹¹

“Health plans would not be investing in these models if they weren’t successfully reducing costs while simultaneously improving the quality of care and the patient experience,” says Lloyd.

Both private and public payers are looking at bundling all costs associated with an episode of care, including the pre- and post-operative visits, the surgeon’s fee, facility fee, and anesthesiologist’s fee. In most bundling schemes, there is an element of risk. If the provider’s cost comes in less than the negotiated rate, he comes out ahead; if costs exceed the negotiated rate, the provider loses. Under these types of arrangements, advocates say, cost-efficient and highly skilled providers can thrive, while less-skilled providers will struggle.

CMS also has thrown its support behind bundled-payment APMs, announcing last October that almost 1,300 healthcare entities, primarily hospitals and physicians’ groups, have joined the Bundled Payments for Care Improvement group —BPCI Advanced.

“We anticipate in the near future — perhaps as soon as the next 2 to 3 years — a significant amount of reimbursements from Medicare will be in the form of a bundled payment model,” says Neil Levinbook, managing attorney of The Levinbook Law Firm, PC, Hauppauge, NY, and chief operating officer of the Vision Center Network of America (VCNA), a clinically integrated network of ophthalmic surgery centers in New York and New Jersey.

Medicare Advantage

About 22 million people, or more than one-third of all Medicare beneficiaries, are enrolled in Medicare Advantage plans, and that number is increasing, up 32% since 2015, according to a Henry J. Kaiser Family Foundation analysis of Medicare Advantage enrollment files.¹² Advantage plan membership, possibly boosted by heavy advertising and benefit increases, jumped 7.8% from 2018 to 2019.¹² The Trump administration clearly favors Medicare Advantage over traditional Medicare fee-for-service and has been aggressively increasing benefits for the Advantage plans.

“I think that being prepared for a shift toward value-based reimbursement is important, because a growing percentage of our services are rendered to patients who are in managed care,” Romansky notes.

Castillo, whose San Antonio Eye Center has a large percentage of patients in Medicare Advantage plans, doesn’t expect significant changes to the current Medicare Advantage fee-for-service reimbursement structure for ASCs in the near term. “Rather than value-based reimbursement in the surgery center, I see insurance companies and Medicare trying to move the remainder of ophthalmology cases being done in the hospitals to the ASC,” Castillo says.

What Does the Future Hold?

Regardless of what happens with CMS, industry observers say that ophthalmic ASCs should be positioning themselves to succeed in a more competitive pricing environment, including aggressively upgrading data management systems to capture and analyze data, controlling costs, and measuring and reporting outcomes. Acting on that information to improve procedures and outcomes and eliminate unnecessary costs is essential, as well. Consolidation, whether through mergers, private equity investments, or clinically integrated networks, may play a role, as pressures mount on smaller practices and ASCs to join larger organizations to gain negotiating clout.

“I think this shift from volume-based to value-based reimbursement has to happen,” says Glenn A. deBrueys, CEO of American SurgiSite Centers and VCNA CEO. “We are going to have to be totally focused on improving the quality of care and that, no matter how you look at it, is a good thing.” ■

Part 2 will discuss how the ophthalmic ASC industry’s first clinically integrated network is positioning itself to succeed in a value-based world. Look for it in the October issue of The Ophthalmic ASC.

REFERENCES

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