Growth and Evolution of Orthopedics Offers Opportunities for ASCs

Growth and Evolution of Orthopedics Offers Opportunities for ASCs

By Kris Ellis

According to the American Academy of Orthopaedic Surgeons (AAOS), musculoskeletal conditions, including injuries to bones, joints, muscles, ligaments, or tendons as well as conditions such as arthritis or osteoporosis, accounted for nearly 157 million visits to physicians’ offices, 15 million visits to hospital outpatient departments, and 29 million visits to emergency departments in 2003.1 With the help of innovative products and techniques, many orthopedic surgeons have been able to successfully move a large portion of their procedures into the safe, patient-friendly environment offered by ambulatory surgery centers (ASCs).

While clinical outcomes for orthopedic surgery are excellent, compensation for these procedures has oftentimes been meager. “Historically, orthopedic procedures, in the Medicare context, have been woefully under-reimbursed in surgery centers,” says Eric Zimmerman, JD, partner, McDermott Will & Emery LLP. “That’s part of the reason why we have not really seen proliferation of orthopedic-focused surgery centers like we have with ophthalmology, for instance.” However, Zimmerman does see a brighter future for orthopedics in terms of reimbursement. He notes that the Centers for Medicare and Medicaid Services (CMS) is currently working on a proposal to re-base ambulatory surgery center rates, and that the agency is expected to come out with a proposal to implement new payment amounts for ASC services, probably by the end of the summer or early next fall. “It’s widely anticipated that they will be proposing substantial increases in reimbursement for orthopedic procedures. If you look at where ASC rates are right now, they’re anywhere from a third to half of what they are in the hospital setting. For high-volume procedures in ASCs such as knee arthroscopy, Medicare is paying the ASC $630 for that procedure, and $1600 in the hospital. For shoulder arthroscopy, $510 in the ASC, $2500 for the hospital.”

In many cases, it is simply not cost-effective for orthopaedists to set up ASCs if they have a high Medicare population, Zimmerman observes. “If they have favorable workers’ comp rates in their state, that’s one thing, or if they have private pay contracts, for example. If you think about the patient population that usually takes advantage of orthopedic procedures in the surgery center environment, it’s probably a younger, healthier population, so depending on what your patient mix is, it’s been viable in some cases to build an ASC, but if you do have a high Medicare patient population, it has been very difficult.”

Beginning Jan. 1, 2008, CMS must implement new payment rates for ASC services. “While I’m speculating, the anticipation is that CMS will propose to base the ASC rates on a percentage discount of hospital rates; whether it will be 60 percent, 70 percent, 80 percent, nobody knows,” Zimmerman says. “Even at 65 percent or 60 percent, you’re still going to see big spikes in payment for orthopedic procedures. If they’re paying $1,600 in the hospital for a procedure that they’re currently paying $630 in the ASC, even at 75 percent that goes up to about $1,200.”

Would-be developers, however, must question how quickly CMS will implement these changes. “Just as orthopedics stands to gain, other specialties stand to lose,” Zimmerman notes. “The specialties at the losing end of the equation are pressuring CMS to phase in any changes, so it may be a couple years before orthopedics realizes its full potential. But, it will certainly see some gain right off the bat, so I think there’s a bright future for anybody thinking about developing an orthopedic ASC right now.”

In addition to Medicare reimbursement changes, a broad expansion of the list of covered orthopedic procedures may also be imminent. “Right now, CMS defines which procedures are appropriate for the ASC setting, but it’s widely expected that they will shift their approach to instead de- fine procedures that are not appropriate for the ASC setting, and therefore the default would be that everything else is acceptable,” Zimmerman concludes.

Beacon Orthopaedics & Sports Medicine is a singlespecialty ASC in Cincinnati. Steve Scheffel, the administrator of the facility, says financial challenges do exist. “What we’ve encountered in this market is that multi-specialty centers might give away an orthopaedic- type service because they make a lot more money on, say, an ENT or plastic surgery procedure,” he explains. Another major issue for Scheffel is the effort to get a fair amount of reimbursement for each and every procedure that is performed. Compounding these issues is the fact that orthopaedics tends to be a higher-cost specialty because of the supplies involved.

Beacon is one of only a few ASCs in its area that has the ability to do overnight cases. Refusal to consider this option on the part of payers has been limiting, however. “What we’ve encountered is a general reluctance of carriers to even entertain the idea of contracting for overnight stay,” Scheffel says. “Even in cases where I know we can save the carriers money, they’re claiming they don’t have a way to pay the bills or it’s not high on their radar screen. I find that kind of peculiar.” Other carriers contend that procedures cannot be considered if they don’t appear on the Medicare grouper. “In the heated political climate of rising healthcare costs, we can demonstrate an area of savings, but the carriers are not interested. It leads one to believe that there’s a secondary issue there.”

A uniform methodology for reimbursing centers is something Scheffel would like to see. “Transparency in this respect is really lacking,” he says. “It’s fine if they use the Medicare methodology; we would then just negotiate other payment rates. The fact of the matter is that if you look at your reimbursement on a grouper-by-grouper basis, you cannot necessarily be assured that the carrier hasn’t played with the grouper. I would caution people to really look at your top 20 or 30 procedures by carrier and reaffirm that they’re in the right group before you sign the contract.”

Even if Medicare reimbursement rates do increase, Scheffel has observed that private payers may not adjust their rates accordingly. “What we’ve seen in the marketplace is that carriers will latch onto the Medicare methodology if rates are going down, but if rates go up, they tend to revert back to their old proprietary systems. Again, it would be nice if there was a more simplistic way of doing it using the same form and the same process. But we have not engaged any carriers that say if their [Medicare’s] reimbursement rates go up we’ll reimburse you at a higher rate, even though these are the same carriers that are disadvantaging our ASC in the local market because they’re paying hospital- owned ASCs HOPD rates.”

Clinical Trends

Innovative technologies, techniques, and pain management strategies have facilitated the continuing trend toward increasing numbers of orthopedic procedures performed in the outpatient setting. The pervasiveness of minimally invasive technology throughout all areas of orthopedics has been a significant factor in this development according to Douglas Lundy, MD, a surgeon at Fort Collins, Colo.-based Orthopaedic Center of the Rockies. “One area is spine surgery — my spine partners are starting to do limited invasive spine operations such as discectomies where they’re able to decompress people through very small incisions, which leads to shorter recovery and rehab after surgery.”

In the area of orthopedic trauma surgery, Lundy’s specialty, patients have also benefited from the use of tiny incisions. “Part of that is it’s somewhat easier to recover, but many times it’s also due to maintaining the normal anatomy; you’re not disrupting that with excessive incisions and excessive dissections.” Technological advances in navigation-type equipment have also helped advance spine and total joint replacement procedures by allowing surgeons to operate with greater precision. “Some of that has use in trauma surgery as well, but a lot of what we’re doing there is just due to the very good X-ray imaging that we have now; we can often put things into place through the use of radiographic guidance, and then of course arthroscopy enables a lot of minimally invasive surgery as well.”

Lundy does many wrist and ankle fracture-related procedures in his surgery center. The ability to expedite the process and avoid a hospital stay is key, in his opinion. “We do a lot of straightforward pediatric injuries there as well. The other thing is that many times after a trauma has occurred, there’s a lot of ‘touch-up’ type surgery that you can do in the surgery center to bone graft or modify an implant, for example.”

The suitability of performing a procedure in the ASC setting as well as what to expect after surgery are important subjects to discuss at length with patients before any operation, Lundy notes. “Many people don’t want to stay overnight; they want to go home, but they want to know that it’s safe and appropriate for them to go home.

It’s important to prep people ahead of time as to what’s expected after surgery and so forth, and that you’re not going to be discharging them while they’re in severe pain; that things are managed well before they leave the center.” Adequate preparation on the part of the ASC is vital as well. “It’s always important to make sure the surgery center has the equipment and technology available that we often assume is at the hospital, because the hospital oftentimes has a seemingly unlimited budget to buy anything and everything, whereas the surgery centers may not have as extensive an inventory, so it’s very important to ensure ahead of time that you’ve got everything you need.”

Lundy sees further improvement and refinement of existing surgical trends moving forward, as well as innovations in promoting healing following surgery. “The tendency in orthopedics is going to be more toward minimally invasive surgery and more biological-type surgery, with forms of cartilage healing. For example, in fracture and fusion-type surgeries we’re adding a lot more osteo-induction type things that are making the bones heal a lot faster, so there’s a definite trend toward adding biologicals when we’re operating.”

Timothy E. Kremchek, MD, CEO of Beacon Orthopaedics & Sports Medicine, predicts a continuing rise in the number of orthopedic procedures appropriate for the outpatient setting. “Ten years ago we would do anterior cruciate ligament (ACL) reconstructions, and those people would stay in the hospital for two or three days. Now we’re doing ACL reconstructions arthroscopically assisted, and patients can go home a couple hours after surgery, sometimes even sooner than that,” he says. “The technologic changes we’ve made in our surgical specialty have allowed us to be even more comfortable in allowing patients to go home from an outpatient setting.

“Even five years ago, if you talk about rotator cuff repairs, they were done open, and in some cases these patients are still kept overnight because of pain,” Kremchek continues. “Now we’re doing this arthroscopically; I’m doing these on a routine basis — 15 per week — and these people all go home within an hour following surgery. We’ve made tremendous advances; it’s not plateaued, it’s only increasing in terms of the number of outpatient procedures we’re doing. Even total joint replacements, if you want to consider the 23-hour hold not an admission. I’m doing total shoulder replacements and total knee replacements on certain patients where they’re going home in that time frame, and this was unheard of, and in some parts of the country still is unheard of at this point.”

Kremchek also cites the integral role of technology in these developments. “For example, with technology, we can now do almost all procedures of the shoulder arthroscopically as opposed to open, for pain relief and generalized ease of outpatient procedures rather than staying overnight. Ten years ago we weren’t even thinking about doing rotator cuffs and a lot of these arthroscopic procedures through a scope at all. They were open procedures and these patients were in the hospital for a period of time, so technology has really helped us.” Improved technology in terms of anesthesia and pain management, such as blocks and pain pumps, has also helped to facilitate this trend.

While minimally invasive shoulder procedures are becoming more commonplace, Kremchek notes that minimally invasive knee and hip replacements may soon become more prominent as well. “As the outcomes of those procedures get scrutinized and are found to be just as good as the larger incisions, the minimally invasive techniques are going to be coveted and certainly asked for by the patient,” he adds. “In these cases there is no reason to keep patients in your facility longer than on an outpatient basis. This is only getting better. I can see a time when, other than major trauma, 90 percent of all orthopedic surgery is done on an outpatient basis.”

The so-called “Tommy John procedure,” which involves replacement of the ulnar collateral ligament, usually on a baseball pitcher, is a fairly unique procedure that is regularly performed at Beacon. “This is a procedure that a number of years ago would have been an inpatient procedure, at least overnight, but these people can now go home the same day without any problems,” Kremchek comments. “We harvest tendons from another part of the body and then actually transplant them to the inside part of the elbow to allow them to throw better. Major league players fly in from all over the country for this procedure, as well as major college players and professional athletes. It’s something that’s moderately commonplace at our facility, again, as an outpatient procedure.”

In terms of future trends, Kremchek points to the importance of catering to increasingly savvy and knowledgeable patients. At Beacon, patients can elect to allow family members or others to watch the procedure via a dedicated viewing area or on video. “Whether it’s arthroscopic or an open procedure, we actually have cameras built in so they can watch the procedure,” Kremchek says. “We also educate them; we have a professional in the room with these families to explain what we’re doing, how we’re doing it, and why we’re doing it. I think this educational/communication aspect is going to be absolutely critical. Patients now are at an all-time high in terms of their understanding and desire for more information. I have people who come to see me who are very knowledgeable about certain injuries and problems, and alternatives as far as fixing their problem. Now we’re able to directly communicate with them, and that’s absolutely huge. The viewing area is scary for some, but certainly intriguing and a step in the right direction for most.” 

Reference:

1. Orthopaedic Fast Facts. 
http://www.orthoinfo.org/fact/thr_report.cfm?
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