Looking back at 2022: ASCs further cement outpatient surgical position
Randy Bishop, President and Chief Executive Officer, Surgical Notes
At the start of each year for the past several years, I've written a column where I take a moment to reflect on the previous year's positive developments and challenges for our ASC industry. I conclude my piece by sharing questions I believe may be answered — or I hope will be answered — during the upcoming year.
While last year was fairly quiet in terms of regulatory changes, that didn't make it an uneventful year. We continued to learn how to live with COVID-19 but have largely settled back into pre-pandemic routines. As a result, we're seeing the positive momentum that was propelling our industry forward prior to COVID-19 returning, which further strengthens the ASC industry's position as the leader in providing high-quality, cost-effective outpatient surgical care. While our industry faces several significant challenges, which I touch on below, I remain greatly optimistic about the short- and long-term future for ASCs.
Below are my thoughts on the year that was.
Outpatient migration not slowing down
It wasn't long ago that spine and total joint procedures were still discussed as "new" procedure types for ASCs. They are now commonplace, with spine and total joint replacement programs increasingly being added to existing ASCs, usually those already with strong orthopedic programs, or as core specialties for new centers. Many of the cases from within these specialties continue to migrate out of hospital operating rooms and into ASC ORs. Surgery centers also continue to add more higher acuity cases and, most importantly, achieve impressive outcomes.
Meanwhile, we're seeing new cardiology ASCs open throughout the country. As surgery centers continue to demonstrate that they can provide great experiences and outcomes in this specialty, we expect to see more of such centers and hopefully more coverage of cardiovascular procedures.
Finally, commercial payers continue to roll out policies and undertake other initiatives that are pushing patients away from hospitals and health systems and toward outpatient settings like ASCs.
The more appropriate surgical care that shifts to ASCs, the better it is for patients, physicians, payers, and our healthcare system as a whole.
Hospitals and health systems rapidly adding ASCs
Hospitals and health systems, recognizing that cases are increasingly leaving their ORs and going to ASCs, are expanding their surgery center portfolios through acquisition of existing centers or development of new facilities, sometimes in partnership with physicians and/or ASC management and development companies. Avanza Healthcare Strategies' most recent survey of senior healthcare executives and clinical leaders found that "more than 60% of hospitals and health systems are planning to grow their investments in ASCs going forward."
Inflation hits hard
Inflation was one of the biggest national and global stories of 2022 and was easily one of the most significant stories for our industry. Inflation hit highs last year unseen since the 1970s. Seemingly everything cost more for surgery centers in 2022, which strained budgets and cut into profit margins. On a positive note, the year ended with the inflation rate declining, with hope that this downward trend will carry into 2023.
Staffing shortages persistIn last year's column, I wrote, "There may have been no bigger challenge for ASCs in 2021 than staffing shortages, particularly on the clinical side." Unfortunately, this remained the case in 2022, with myriad factors making it more time-consuming and expensive to add and keep qualified staff. It doesn't look like recruitment and retention will get much easier this year.
One of the ways surgery centers are working to combat these challenges is by outsourcing various services, including revenue cycle management and IT management. Doing so is helping reduce the amount of work required for staff recruitment and retention (i.e., number of people who need to be hired/retained) while also freeing up valuable time and resources that can make recruitment and retention efforts easier and more effective.
Supply chain disruptions are still a headache
Another challenge I highlighted in last year's column that remained a big issue in 2022 was the struggle for ASCs to acquire a range of equipment and supplies — and when they could purchase the equipment and supplies that were needed, it was often at or near top dollar. On a positive note, we saw supply chain disruptions easing in 2022.
Growth in supply and equipment vendors
A positive development that helped ASCs with purchasing was the ongoing growth in the number of companies developing products for and selling into the surgery center industry. We saw both new companies forming and existing companies launching dedicated ASC divisions. More vendor options helped ASCs acquire supplies they needed, and competition helped bring costs down a bit.
As companies launch new products, older versions of like products are coming down in price. This is helping more ASCs afford investments in capital equipment such as robotics. As more ASCs add robotics and other new clinical technology, procedures that require or benefit from this equipment will gradually come to surgery centers, furthering the outpatient migration.
Final payment rule left us wanting
The 2023 final Medicare payment rule was largely anticlimactic, with the Ambulatory Surgery Center Association (ASCA) noting it was a mixed bag for surgery centers. CMS bumped up its inflation update percentage from what it had proposed, although, as ASCA's Chief Executive Officer Bill Prentice said, this "still falls far short of addressing the escalating costs that surgery centers are experiencing in staffing, services and supplies."
The big, positive news from the rule saw CMS finalizing its policy to provide increased payment to ASCs for combinations of certain service codes and add-on procedure codes. The adjustment accounts for the cost of performing these select add-on procedures. ASCA reported that CMS identified 55 code combinations eligible for the complexity adjustment in ASCs and provided new C-codes for the code combinations.
The disappointing news was that only four new procedures were added to the ASC-covered procedures list for 2023, whereas ASCA proposed 47 procedures. Finally, and unfortunately, CMS chose not to revisit its 2021 decision to begin eliminating the inpatient-only list, which was reversed last year.
A reprieve from a No Surprises Act requirement
In early December, CMS released guidance indefinitely delaying enforcement of requirements for select good faith estimates (GFEs) associated with the No Surprises Act (NSA). More specifically, the delay concerns those situations where GFEs for uninsured or self-pay individuals do not include expected charges from co-providers or co-facilities.
CMS explained its decision by stating that "this exercise of enforcement discretion was necessary to allow time for providers and facilities to develop mechanisms for convening providers and facilities to request, and co-providers and co-facilities to provide, complete and accurate pricing information for the convening provider or facility to incorporate into the GFE for uninsured (or self-pay) individuals."
As ASCA noted in its Government Affairs Update (membership required for access), the association expects many ASCs to be considered co-facilities under the NSA, although facilities should understand that uninsured or self-pay patients can directly request GFEs from any provider or facility.
Looking into the crystal ball…
Now comes my list of questions for the year ahead. With a divided government, I am not expecting many significant federal regulatory changes. I am hoping that 2023 will be a relatively uneventful year, giving us all some more time to recover from the turbulence of the past few years. With that said, I'm sure there will be some big developments for our industry — hopefully more positive than negative.
- Will we continue to see inflation decline?
- Will we make more progress toward returning to a pre-pandemic supply chain?
- How does the continued staffing shortage and burnout further transform ASC operations?
- What new ways will technology and automation help surgery centers improve efficiency and performance?
- Will commercial payers continue to roll out policies that steer surgical procedures to settings like ASCs?
- And will payers back up those policies with appropriate levels of reimbursement so surgeons and ASCs are incentivized to add these procedures?
- How will increasing levels of ASC investments by hospitals and health systems affect the industry?
- Will CMS revisit elimination of the inpatient-only list?
I hope you found my summary informative. Throughout the year, the Surgical Notes team closely monitors and shares information on developments impacting our ASC industry. This better ensures we can most effectively support our clients and their efforts to deliver high-quality, cost-effective surgical care. For the latest company and industry news, visit www.surgicalnotes.com and follow Surgical Notes on LinkedIn.
Randy Bishop (firstname.lastname@example.org) is president and chief executive officer for Surgical Notes. Surgical Notes is a nationwide provider of ASC billing solutions, including transcription, coding, revenue cycle management (RCM), and document management applications for the ASC and surgical hospital markets.