Surgicenters Say They're Part of Medicare Solution in Larson Bill

WASHINGTON--Need a colonoscopy? Or cataract surgery? How about an operation on your finger or foot?

Three decades ago, you probably would have had to go to a hospital, even for a minor surgical procedure. But more and more, such cases are being handled at free-standing facilities called ambulatory surgical centers (ASCs).

ASCs have the same staff and clinical requirements as hospital outpatient departments. But ASCs, sometimes called "surgicenters," often specialize in one narrow arena, such as orthopedics or ophthalmology, and their physicians usually perform hundreds, even thousands, of those surgeries a year. One such center in Hartford, for example, does more than 10,000 eye-related surgeries annually.

Even as the number of ASCs has swelled in the last decade, however, ASC leaders say their financial well-being is under threat, with hospitals eager to gobble them up. So this increasingly-powerful health care sector is pushing legislation that could tilt the balance between surgical centers and hospitals, as the competition for lucrative procedures balloons along with America's aging population.

Last week, Rep. John Larson, D- 1st District, joined with a top House Republican, Pete Sessions of Texas, to introduce legislation designed to increase the amount that ASCs are reimbursed by Medicare, the government health insurance program for the elderly. The measure, pushed by the Ambulatory Surgery Center Association, an advocacy group, would also give ASCs entrée into a key element of the federal health care reform law--a change that could potentially drive millions of new Medicare patients their way.

Already, more than 3 million Medicare patients receive care at ASCs each year. And the number of Medicare-certified ASCs has nearly doubled, from 2,786 in 1999 to more than 5,200 today. Often owned by groups of physicians, ASCs are allowed to perform more than 3,000 low-complication procedures, and they often do so at a lower cost than a regular hospital.

Indeed, Larson and others say his legislation could end up saving Medicare billions of dollars--a key selling point when entitlement spending for that health care program is at the epicenter of the current Washington budget battle.

Proponents say the bill would simply rectify a significant gap between the Medicare reimbursements paid to hospitals and those paid ASCs for the same procedures. ASC advocates hope it will also slow an emerging trend, in which hospitals are snapping up ASCs in acquisitions that help their bottom line.

"Surgery centers are providing care more cost efficiently and are sort of penalized for doing a good job and are really being squeezed," said Lisa Winkler, executive director of the Connecticut Association of Ambulatory Surgery Centers . "Our hope is this legislation will address this issue."

Joanne Roche, a nurse and administrator of the Hartford Surgical Center, put it more bluntly. "We're getting the life sucked out of us," she said. Roche noted that her labor and supply costs are the same as any hospital outpatient department.

"Everything is equal and on par with the hospital. It has to be," Roche said, referring to state and federal requirements for ASCs. "Yet the real thing that gets in my craw, we get paid so much differently."

Hospital groups, so far, are staying relatively mum on Larson's bill. But officials in the industry say hospital purchases of ASCs are driven by quality considerations, not financial incentives.

"When we acquire a center, it becomes an integrated center with our hospital and our health system," said Jeff Flaks, chief operating officer for Hartford Hospital. "It's to create a center of excellence within broader context and to integrate inpatient and outpatient services."

The goal, he said, is to offer a more seamless "continuum of care" for patients, and to increase access and quality at both the hospital and the ASC. Flaks said they also typically invest "millions of dollars" in any acquired facility, bringing in new equipment, introducing electronic records, and updated technology.

As recently as 2005, ASCs were reimbursed almost as much as hospitals for removing a Medicare patient's cataracts, performing an endoscopy, or the like. Now, Medicare only pays ASCs about half--56 percent on average--what it gives hospitals for surgical procedures.

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