Long-run growth of ambulatory surgery centers 1990-2015 and Medicare payment policy.

OBJECTIVE: To examine long-run growth in the ambulatory surgery center (ASC) industry and potential factors influencing its trajectory. DATA SOURCES: National data for all Medicare-certified ASCs (1990-2015) and outpatient discharge records from the state of Florida in 2007. STUDY DESIGN: We documented the number of ASCs in the United States over time and decomposed the trend into underlying ASC market entry and exit behavior. We then examined the plausibility of 2008 Medicare payment reforms to influence the trend changes. DATA EXTRACTION METHODS: Data on ASC openings and closures are obtained from the Centers for Medicare and Medicaid Services Provider of Service files. Secondary data on ASC volume in Florida are obtained from the Florida Agency for Health Care Administration. PRINCIPAL FINDINGS: The number of ASCs in the United States grew 5%-10% annually between 1990 and 2007 but by 1% or less beginning in 2008. This change coincided with substantive reductions in Medicare payments for key ASC services. The annual number of new ASCs was as much as 50% lower following the payment change. CONCLUSIONS: ASCs are an important competitor for outpatient services, but growth has slowed dramatically. Sharp changes in new ASC entry align with less generous Medicare fees.

How Did Orthopaedic Surgeons Perform in the 2018 Centers for Medicaid & Medicare Services Merit-based Incentive Payment System?

BACKGROUND: The Merit-based Incentive Payment System (MIPS) is the latest value-based payment program implemented by the Centers for Medicare & Medicaid Services. As performance-based bonuses and penalties continue to rise in magnitude, it is essential to evaluate this program's ability to achieve its core objectives of quality improvement, cost reduction, and competition around clinically meaningful outcomes. QUESTIONS/PURPOSES: We asked the following: (1) How do orthopaedic surgeons differ on the MIPS compared with surgeons in other specialties, both in terms of the MIPS scores and bonuses that derive from them? (2) What features of surgeons and practices are associated with receiving penalties based on the MIPS? (3) What features of surgeons and practices are associated with receiving a perfect score of 100 based on the MIPS? METHODS: Scores from the 2018 MIPS reporting period were linked to physician demographic and practice-based information using the Medicare Part B Provider Utilization and Payment File, the National Plan and Provider Enumeration System Data (NPPES), and National Physician Compare Database. For all orthopaedic surgeons identified within the Physician Compare Database, there were 15,210 MIPS scores identified, representing a 72% (15,210 of 21,124) participation rate in the 2018 MIPS. Those participating in the MIPS receive a final score (0 to 100, with 100 being a perfect score) based on a weighted calculation of performance metrics across four domains: quality, promoting interoperability, improvement activities, and costs. In 2018, orthopaedic surgeons had an overall mean ± SD score of 87 ± 21. From these scores, payment adjustments are determined in the following manner: scores less than 15 received a maximum penalty adjustment of -5% ("penalty"), scores equal to 15 did not receive an adjustment ("neutral"), scores between 15 and 70 received a positive adjustment ("positive"), and scores above 70 (maximum 100) received both a positive adjustment and an additional exceptional performance adjustment with a maximum adjustment of +5% ("bonus"). Adjustments among orthopaedic surgeons were compared across various demographic and practice characteristics. Both the mean MIPS score and the resulting payment adjustments were compared with a group of surgeons in other subspecialties. Finally, multivariable logistic regression models were generated to identify which variables were associated with increased odds of receiving a penalty as well as a perfect score of 100. RESULTS: Compared with surgeons in other specialties, orthopaedic surgeons' mean MIPS score was 4.8 (95% CI 4.3 to 5.2; p < 0.001) points lower. From this difference, a lower proportion of orthopaedic surgeons received bonuses (-5.0% [95% CI -5.6 to -4.3]; p < 0.001), and a greater proportion received penalties (+0.5% [95% CI 0.2 to 0.8]; p < 0.001) and positive adjustments (+4.6% [95% CI 6.1 to 10.7]; p < 0.001) compared with surgeons in other specialties. After controlling for potentially confounding variables such as gender, years in practice, and practice setting, small (1 to 49 members) group size (adjusted odds ratio 22.2 [95% CI 8.17 to 60.3]; p < 0.001) and higher Hierarchical Condition Category (HCC) scores (aOR 2.32 [95% CI 1.35 to 4.01]; p = 0.002) were associated with increased odds of a penalty. Also, after controlling for potential confounding, we found that reporting through an alternative payment model (aOR 28.7 [95% CI 24.0 to 34.3]; p < 0.001) was associated with increased odds of a perfect score, whereas small practice size (1 to 49 members) (aOR 0.35 [95% CI 0.31 to 0.39]; p < 0.001), a high patient volume (greater than 500 Medicare patients) (aOR 0.82 [95% CI 0.70 to 0.95]; p = 0.01), and higher HCC score (aOR 0.79 [95% Cl 0.66 to 0.93]; p = 0.006) were associated with decreased odds of a perfect MIPS score. CONCLUSION: Collectively, orthopaedic surgeons performed well in the second year of the MIPS, with 87% earning bonus payments. Among participating orthopaedic surgeons, individual reporting affiliation, small practice size, and more medically complex patient populations were associated with higher odds of receiving penalties and lower odds of earning a perfect score. Based on these findings, we recommend that individuals and orthopaedic surgeons in small group practices strive to forge partnerships with larger hospital practices with adequate ancillary staff to support quality reporting initiatives. Such partnerships may help relieve surgeons of growing administrative obligations and allow for maintained focus on direct patient care activities. Policymakers should aim to produce a shortened panel of performance measures to ensure more standardized comparison and less time and energy diverted from established clinical workflows. The current MIPS scoring methodology should also be amended with a complexity modifier to ensure fair evaluation of surgeons practicing in the safety net setting, or those treating patients with a high comorbidity burden. LEVEL OF EVIDENCE: Level III, therapeutic study.

Procedure Reimbursement, Inflation, and the Declining Buying Power of the Vascular Surgeon (2011-2021).

PURPOSE: The purpose of this study was to evaluate trends in Medicare reimbursement for common vascular procedures over the last decade. To enrich the context of this analysis, vascular procedure reimbursement is directly compared to inflation-adjusted changes in other surgical specialties. METHODS: The Centers for Medicare & Medicaid Services Physician/Supplier Procedure Summary file was utilized to identify the 20 procedures most commonly performed by vascular surgeons from 2011-2021. A similar analysis was performed for orthopedic, general, and neurological surgeons. The Centers for Medicare & Medicaid Services Physician-Fee Schedule Look-Up Tool was queried for each procedure, and reimbursement data was extracted. All monetary data was adjusted for inflation to 2021 dollars utilizing the consumer price index. Average year-over-year and total percentage change in reimbursement were calculated based on adjusted data for included procedures. Comparisons to other specialty data were made with ANOVA. RESULTS: From 2011-2021, the average, unadjusted change in reimbursement for vascular procedures was -7.2%. Accounting for inflation, the average procedural reimbursement declined by 20.1%. The greatest decline was observed in phlebectomy of varicose veins (-50.6%). Open arteriovenous fistula revision was the only vascular procedure with an increase in inflation-adjusted reimbursement (+7.5%). Year-over-year, inflation-adjusted reimbursement for common vascular procedures decreased by 2.0% per year. Venous procedures experienced the largest decrease in average adjusted reimbursement (-42.4%), followed by endovascular (-20.1%) and open procedures (-13.9%). These changes were significantly different across procedural subgroups (P < 0.001). During the same period, the average adjusted change in reimbursement for the 20 most common procedures in orthopedic surgery, general surgery, and neurosurgery was -11.6% vs. -20.1% for vascular surgery (P = 0.004). CONCLUSION: Medicare reimbursement for common surgical procedures has declined over the last decade. While absolute reimbursement has remained relatively stable for several procedures, accounting for a decade of inflation demonstrates the true diminution of buying power for equivalent work. The most alarming observation is that vascular surgeons have faced a disproportionate decrease in inflation-adjusted reimbursement in comparison to other surgical specialists. Awareness of these trends is a crucial first step towards improved advocacy and efforts to ensure the "value" of vascular surgery does not continue to erode.

Exploring the rapid expansion of office-based laboratories and peripheral vascular interventions across the United States.

OBJECTIVE: To characterize the relationship between office-based laboratory (OBL) use and Medicare payments for peripheral vascular interventions (PVI). METHODS: Using the Centers for Medicare and Medicaid Services Provider Utilization and Payment Data Public Use Files from 2014 to 2017, we identified providers who performed percutaneous transluminal angioplasty, stent placement, and atherectomy. Procedures were aggregated at the provider and hospital referral region (HRR) level. RESULTS: Between 2014 and 2017, 2641 providers performed 308,247 procedures. The mean payment for OBL stent placement in 2017 was $4383.39, and mean payment for OBL atherectomy was $13,079.63. The change in the mean payment amount varied significantly, from a decrease of $16.97 in HRR 146 to an increase of $43.77 per beneficiary over the study period in HRR 11. The change in the rate of PVI also varied substantially, and moderately correlated with change in payment across HRRs (R2 = 0.40; P < .001). The majority of HRRs experienced an increase in rate of PVI within OBLs, which strongly correlated with changes in payments (R2 = 0.85; P < .001). Furthermore, 85% of the variance in change in payment was explained by increases in OBL atherectomy (P < .001). CONCLUSIONS: A rapid shift into the office setting for PVIs occurred within some HRRs, which was highly geographically variable and was strongly correlated with payments. Policymakers should revisit the current payment structure for OBL use and, in particular atherectomy, to better align the policy with its intended goals.

Financial viability of endovascular aortic repair in the modern era.

BACKGROUND: In the current era of cost containment, the financial impact of high-cost procedures such as endovascular aneurysm repair (EVAR) remains an area of intensive interest. Previous reports suggested slim to negative operating margins with EVAR, prompting widespread initiatives to reduce cost and to improve reimbursement. In 2015, the Centers for Medicare and Medicaid Services (CMS) announced the reclassification of EVAR to more specific diagnosis-related group (DRG) coding and predicted an overall increase in hospital reimbursement. The potential impact of this change has not been described. METHODS: Patients undergoing elective EVAR at a single institution between January 2014 and December 2018 were identified retrospectively, then stratified by date. Group 1 patients underwent EVAR before DRG change in 2015 and were classified with DRG 237/238, major cardiovascular procedure. Group 2 patients underwent EVAR after the change and were classified as DRG 268/269, aortic/heart assist procedures. The total direct cost included implant cost, operating room (OR) labor, room and board, and other supply costs. Net revenue reflected real payer mix values without extrapolation based on standard Medicare rates. Hospital profit was defined as the contribution to indirect (CTI), subtracting total direct cost from net revenue. RESULTS: A total of 188 encounters were included, 67 (36%) in group 1 and 121 (64%) in group 2. Medicare patients composed 84% of group 1 and 81% of group 2. CTI (profit) increased by $4447 (+123%) from $3615 in group 1 to $8062 in group 2. Net revenue per encounter increased by $2054 (+7.1%). In group 1, the higher reimbursement DRG code 237 was applied in 5 of 67 (7.5%) patients, whereas DRG code 268 was assigned in 19 of 121 (15.1%) patients in group 2. Total direct cost per encounter decreased by $2012 (-7.9%). This decrease in cost was driven by a reduction in implant cost, from a mean $16,914 per encounter in group 1 to a mean $15,655 in group 2 (-$1259 or -7.4% per encounter) and by a decrease in OR labor cost, $2838 in group 1 to $2361 in group 2 (-$477 or -17.0% per encounter). CONCLUSIONS: A significant improvement in hospital CTI was observed for elective EVAR during the course of the study. The increased DRG reimbursement after the Centers for Medicare and Medicaid Services coding changes in 2015 was a major driver of this salutary change. Notably, efforts to reduce implant and OR cost as well as to improve coding and documentation accuracy over time had an equally important impact on financial return.

The financial evolution of endovascular aneurysm repair delivery in contemporary practice.

OBJECTIVE: The fiscal impact of endovascular repair (EVR) of aortic aneurysms and the requisite device costs have previously highlighted the tenuous long-term financial sustainability among Medicare beneficiaries. The Centers for Medicare & Medicaid Services have since reclassified EVR remuneration paradigms with new Medicare Severity Diagnosis-Related Groups (MS-DRGs) intended to better address the procedure's cost profile. The impact of this change remains unknown. The purpose of this analysis was to compare EVR-specific costs and revenue among Medicare beneficiaries both before and after this change. METHODS: All infrarenal EVRs performed in fiscal years (FYs) 2014 and 2015, before the MS-DRG change, and those performed in FYs 2017 and 2018, after the MS-DRG change, were identified using the DRG codes 238 (n = 108) and 269 (n = 84), respectively. We then identified those who were treated according to the instructions for use guidelines with a single manufacturer's device and billed to Medicare (n = 23 in FY14-15; n = 22 in FY17-18). From these cohorts, we determined total procedure technical costs, technical revenue, and net technical margin in conjunction with the hospital finance department. Results were then compared between these two groups. RESULTS: The two cohorts demonstrated similar demographic profiles (FY14-15 vs FY17-18 cohort: age, 78 years vs 74 years; median length of stay, 1.0 day vs 1.0 day). Mean total technical costs were slightly higher in the FY17-18 group ($24,511 in FY14-15 vs $26,445 in FY17-18). Graft implants continued to account for a significant portion of the total cost, with the device cost accounting for 56% of the total procedure costs in both cohorts. Net revenue was greater in the FY17-18 group by $5800 ($30,698 in FY14-15 vs $36,498 in FY17-18), resulting in an increased overall margin in the FY17-18 group compared with the FY14-15 group ($6188 in FY14-15 vs $10,053 in FY17-18). CONCLUSIONS: Device costs remain the single greatest cost driver associated with EVR delivery. DRG reclassification of EVR to address total procedure and implant costs appears to better address the requisite associated procedure costs and may thereby better support long-term fiscal sustainability of this procedure for hospitals and health systems alike.

Barriers to Revision Total Hip Service Lines: A Surgeon's Perspective Through a Deterministic Financial Model.

BACKGROUND: Revision THA represents approximately 5% to 10% of all THAs. Despite the complexity of these procedures, revision arthroplasty service lines are generally absent even at high-volume orthopaedic centers. We wanted to evaluate whether financial compensation is a barrier for the development of revision THA service lines as assessed by RVUs. QUESTIONS/PURPOSES: Therefore, we asked: (1) Are physicians fairly compensated for revision THA on a per-minute basis compared with primary THA? (2) Are physicians fairly compensated for revision THA on a per-day basis compared with primary THA? METHODS: Our deterministic financial model was derived from retrospective data of all patients undergoing primary or revision THA between January 2016 and June 2018 at an academic healthcare organization. Patients were divided into five cohorts based on their surgical procedure: primary THA, head and liner exchange, acetabular component revision THA, femoral component revision THA, and combined femoral and acetabular component revision THA. Mean surgical times were calculated for each cohort, and each cohort was assigned a relative value unit (RVU) derived from the 2018 Center for Medicaid and Medicare assigned RVU fee schedule. Using a combination of mean surgical time and RVUs rewarded for each procedure, three models were developed to assess the financial incentive to perform THA services for each cohort. These models included: (1) RVUs earned per the mean surgical time, (2) RVUs earned for a single operating room for a full day of THAs, and (3) RVUs earned for two operating rooms for a full day of primary THAs versus a single rooms for a full day of revision THAs. A sixth cohort was added in the latter two models to more accurately reflect the variety in a typical surgical day. This consisted of a blend of revision THAs: one acetabular, one femoral, and one full revision. The RVUs generated in each model were compared across the cohorts. RESULTS: Compared with primary THA by RVU per minute, in revision THA, head and liner exchange demonstrated a 4% per minute deficit, acetabular component revision demonstrated a 29% deficit, femoral component revision demonstrated a 32% deficit, and full revision demonstrated a 27% deficit. Compared with primary service lines with one room, revision surgeons with a variety of revision THA surgeries lost 26% potential relative value units per day. Compared with a two-room primary THA service, revision surgeons lost 55% potential relative value units per day. CONCLUSIONS: In a comparison of relative value units of a typical two-room primary THA service line versus those of a dedicated revision THA service line, we found that revision specialists may lose between 28% and 55% of their RVU earnings. The current Centers for Medicare and Medicaid Services reimbursement model is not viable for the arthroplasty surgeon and limits patient access to revision THA specialists. LEVEL OF EVIDENCE: Level III, economic and decision analysis.

Three ways COVID-19 makes the Oncology Care First Model more attractive.

COVID-19 has delayed the transition to Oncology Care First, but the forthcoming model could help.

Are we ready for bundled payments for major bowel surgery?

BACKGROUND: The Centers for Medicare & Medicaid Services (CMS) recently announced a new voluntary episode payment model for major bowel surgery. The purpose of this study was to examine the financial impact of bundled payments for major bowel surgery. METHODS: An institutional database was retrospectively queried for all patients who underwent major bowel surgery between July 2016 and June 2018. Procedures were categorized using MS-DRG coding: MS-DRG 329 (with MCC, major complications and comorbidity), MS-DRG 330 (with CC, complications and comorbidity), and MS-DRG 331 (without CC/MCC). RESULTS: A total of 745 patients underwent 798 procedures, with mean age 62.1 years and BMI 29.2 kg/m2. The median LOS was 4.0 days, with 12.5% of patients being discharged to a post-acute care facility for an average of 38.5 days. The mean hospital cost was $18,525. The mean payment to a post-acute care facility was $423 per day. The 90-day readmission rate was 8.6% at an average cost of $12,859 per readmission. Patients with major complications and comorbidity (MS-DRG 329) had higher CMS Hierarchical Condition Categories scores, longer LOS, higher costs, more required home health services or post-acute care facilities, and had higher 90-day readmissions. In a fee-for-service model, hospital reimbursements resulted in a negative margin of - 8.2% for MS-DRG 329, - 2.6% for MS-DRG 330, but a positive margin of 2.8% for MS-DRG 331. In a bundled payment model, the hospital would incur a loss of - 13.1%, - 11.1%, and - 1.9% for MS-DRG 329, 330, and 331, respectively. CONCLUSIONS: Patients undergoing major bowel surgery are often a heterogeneous population with varied pre-existing comorbid conditions who require a high level of complex care and utilize greater hospital resources. Further study is needed to identify areas of cost containment without compromising the overall quality of care.

Inaugural Readmission Penalties for Total Hip and Total Knee Arthroplasty Procedures Under the Hospital Readmissions Reduction Program.

Importance: The Hospital Readmissions Reduction Program (HRRP) is a Centers for Medicare and Medicaid Services policy that levies hospital reimbursement penalties based on excess readmissions of patients with 4 medical conditions and 3 surgical procedures. A greater understanding of factors associated with the 3 surgical reimbursement penalties is needed for clinicians in surgical practice. Objective: To investigate the first year of HRRP readmission penalties applied to 2 surgical procedures-elective total hip arthroplasty (THA) and total knee arthroplasty (TKA)-in the context of hospital and patient characteristics. Design, Setting, and Participants: Fiscal year 2015 HRRP penalization data from Hospital Compare were linked with the American Hospital Association Annual Survey and with the Healthcare Cost and Utilization Project State Inpatient Database for hospitals in the state of Florida. By using a case-control framework, those hospitals were separated based on HRRP penalty severity, as measured with the HRRP THA and TKA excess readmission ratio, and compared according to orthopedic volume as well as hospital-level and patient-level characteristics. The first year of HRRP readmission penalties applied to surgery in Florida Medicare subsection (d) hospitals was examined, identifying 60 663 Medicare patients who underwent elective THA or TKA in 143 Florida hospitals. The data analysis was conducted from February 2016 to January 2017. Exposures: Annual hospital THA and TKA volume, other hospital-level characteristics, and patient factors used in HRRP risk adjustment. Main Outcomes and Measures: The HRRP penalties with HRRP excess readmission ratios were measured, and their association with annual THA and TKA volume, a common measure of surgical quality, was evaluated. The HRRP penalties for surgical care according to hospital and readmitted patient characteristics were then examined. Results: Among 143 Florida hospitals, 2991 of 60 663 Medicare patients (4.9%) who underwent THA or TKA were readmitted within 30 days. Annual hospital arthroplasty volume seemed to follow an inverse association with both unadjusted readmission rates (r = -0.16, P = .06) and HRRP risk-adjusted readmission penalties (r = -0.12, P = .14), but these associations were not statistically significant. Other hospital characteristics and readmitted patient characteristics were similar across HRRP orthopedic penalty severity. Conclusions and Relevance: This study's findings suggest that higher-volume hospitals had less severe, but not significantly different, rates of readmission and HRRP penalties, without systematic differences across readmitted patients.

Comparison of Payment Margins Between the Bundled Payments for Care Improvement Initiative and the Comprehensive Care for Joint Replacement Model Shows a Marked Reduction for a Successful Program.

BACKGROUND: The Comprehensive Care for Joint Replacement (CJR) model was implemented to address the 2 most commonly billed inpatient surgical procedures, total hip arthroplasty and total knee arthroplasty. The primary purpose of this study was to review the economic implications of 1 institution's mandatory involvement in the CJR in comparison with prior involvement in the Bundled Payments for Care Improvement (BPCI) initiative. METHODS: The mean cost per episode of care was calculated using our institution's historical data. The target prices, projected savings or losses per episode of care, and projected annual savings for both BPCI and CJR were established and were comparatively analyzed. RESULTS: The CJR target prices will decrease in comparison with BPCI target prices by 24.0% for Medicare Severity-Diagnosis Related Group (MS-DRG) 469 without fracture, 22.8% for MS-DRG 469 with fracture, 26.1% for MS-DRG 470 without fracture, and 27.7% for MS-DRG 470 with fracture, resulting in a reduction in savings per episode of care by 92.8% for MS-DRG 469 without fracture, 166.0% for MS-DRG 469 with fracture, 94.9% for MS-DRG 470 without fracture, and 61.7% for MS-DRG 470 with fracture. Our institution's projected annual savings under CJR will decrease by 83.3%. CONCLUSIONS: These results suggest that the margin for savings in the CJR will be substantially reduced compared with the margin for savings in the BPCI. In hospitals that had previously devoted resources, these will have far less impact in the CJR, and hospitals new to the CJR that have not made these investments previously will require even greater resources for developing cost reduction and quality control strategies to remain financially solvent. LEVEL OF EVIDENCE: Economic Level IV. See Instructions for Authors for a complete description of levels of evidence.

Variation in Physician-Specific Episode Payments for Major Cancer Surgery and Implications for the Merit-Based Incentive Program.

BACKGROUND: Nearly 1.5 million clinicians in the United States will be affected by Centers for Medicare and Medicaid Services' (CMS) new payment program, the Merit-based Incentive Program (MIPS), where clinicians will be penalized or rewarded based on the health care expenditures of their patients. We therefore examined expenditures for major cancer surgery to understand physician-specific variation in episode payments. METHODS: We used Surveillance, Epidemiology and End Results-Medicare data to identify patients aged 66-99 y who underwent a prostatectomy, nephrectomy, lung, or colorectal resection for cancer from 2008 to 2012. We calculated 90-d episode payments, attributed each episode to a physician, and evaluated physician-level payment variation. Next, we determined which component (index admission, readmission, physician services, postacute care, hospice) drove differences in payments. Finally, we evaluated payments by geographic region, number of comorbidities, and cancer stage. RESULTS: We identified 39,109 patients who underwent surgery by 1 of 7182 providers. There was wide variation in payments for each procedure (prostatectomy: $7046-$40,687; nephrectomy: $8855-$82,489; lung resection: $11,167-$223,467; colorectal resection: $9711-$199,480). The largest component difference in episode payments varied by condition: physician payments for prostatectomy (29%), postacute care for nephrectomy (38%) and colorectal resections (38%), and index hospital admission for lung resections (43%) but were fairly stable across region, comorbidity number, and cancer stage. CONCLUSIONS: For patients undergoing major cancer surgery, 90-d episode payments vary widely across surgeons. The components driving such variation differ by condition but remain stable across region, number of comorbidities, and cancer stage. These data suggest that programs to reduce specific component payments may have advantages over those targeting individual physicians for decreasing health care expenditures.