Looking back at 2023: ASCs End the Year With a Big, Surprise Win

A tradition for me for the past several years is to write a column where I reflect on the previous year's positive developments for and challenges facing our ASC industry. I conclude these pieces with questions I believe may be answered — or I hope will be answered — during the upcoming year.

In 2023, we witnessed some significant regulatory changes and developments on the state level but were largely looking at a fairly quiet year overall. That was before the Centers for Medicare & Medicaid Services (CMS) surprised us with a significant decision — one that is sure to add to the positive momentum we've been experiencing over the past several years. While ASCs face big challenges, which I touch on below, I expect 2024 to be an outstanding year for our industry and remain optimistic about the future for ASCs.

Below are my thoughts on 2023, along with some predictions for 2024.

Total Shoulders a Total Shocker

When CMS released its 2024 proposed Medicare payment rule, the industry's response was generally muted because the proposal was largely underwhelming — a disappointment following what I had described as an "anticlimactic" 2023 final payment rule in last year's reflections. While it was good to see CMS proposing the addition of 26 dental surgical codes to the ASC Covered Procedures List (ASC-CPL), CMS's decision not to include codes like total shoulder arthroplasty made the proposed rule feel like a missed opportunity. As Bill Prentice, chief executive officer of the Ambulatory Surgery Center Association, noted at the time, "It is mystifying that CMS allows off-campus hospital outpatient departments to perform total shoulder joint surgeries yet prohibits similarly regulated surgery centers — served by identically trained surgeons, nurses and other staff — from performing them on even the otherwise healthiest beneficiaries."

Then the 2024 final payment rule turned out to be anything but anticlimactic, with CMS surprising us all by adding 11 procedures to the ASC-CPL that were not included in the proposed rule, including total shoulder arthroplasty. Other noteworthy code additions included total ankle replacement, hip tendon incision, meniscal knee replacement, and repeat thyroid surgery.

Outpatient Migration Kicks Into Overdrive

The migration of surgical care out of hospitals and into ASCs that we've seen over the past several years continued in 2023 and shows no signs of slowing down. In fact, we may see it accelerate further in 2024. In a June 2023 report, consulting firm Sg2 projected outpatient surgical volumes will grow 18% by 2033 and ASCs will see 12% growth in the next 5 years and 22% growth in the next 10 years. This report was published before CMS approved total shoulders for ASCs.

Total joint replacement programs are now commonplace in ASCs, and Medicare's approval of total shoulders and total ankles should help spur more of these programs and growth of existing programs — great news for ASCs, patients, surgeons, and payers.

Now that it's been a few years since CMS approved diagnostic and interventional coronary procedures for ASCs, cardiology has clearly established itself as the "next big thing" for surgery centers, as Becker's ASC Review referred to it in 2022. While some states prohibit ASCs from performing these procedures, despite Medicare's approval, there's every reason to believe the advocacy efforts of ASCA, state ASC associations, and industry leaders will eventually lead to the repeal of these unnecessary restrictions.

We're seeing more appropriate surgical care shifting into ASCs, yet we're also witnessing care shifting out of ASCs and into the surgical suite or proceduralist office, including some pain management and hand procedures. The potential loss of volume may seem like a concern on the surface, but ASCs may be able to fill open blocks with more profitable procedures.

We should expect commercial payers to continue rolling out policies and undertake initiatives that steer patients to what they view as the most optimal site for procedures, with "optimal" being defined to include not just quality and safety but cost.

Data Takes on Greater Importance

The phrase "data is king" is perhaps overused, but it's a phrase looking increasingly applicable for ASCs. In 2023, we saw ASCs relying upon the data they capture to do more than ever, including identifying areas in need of improvement, negotiating for better commercial reimbursement and coverage, securing more favorable contracts with device and equipment partners, and marketing the quality of their services. Data provided to organizations like the ASC Quality Collaboration (ASCQC) and the Leapfrog Group are helping demonstrate the quality care ASCs provide, helping associations better argue for expanded coverage of procedures, and helping distinguish ASCs from hospitals (and other ASCs). The use of next-generation analytics is empowering ASCs centers to take deeper dives into their performance and better capitalize on growth and improvement opportunities.

Another form of data will soon take on significant importance for ASCs. CMS has maintained mandatory implementation of the Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey beginning with the calendar year 2025 reporting period/calendar year 2027 payment determination year. While there's still the possibility that CMS could delay mandatory use of the OAS CAHPS Survey in ASCs again (it did so in the 2018 Medicare payment final rule), ASCA's Bill Prentice told OR Today that ASCA is advising surgery centers not to expect another delay.

States Question the Need for CON Laws

We may look back at 2023 as a year that prompted significant changes to certificate of need (CON) laws nationwide. North Carolina greatly amended its CON law earlier in the year, and then South Carolina eliminated the requirement for most healthcare facilities to obtain a CON in October. States including Georgia, Mississippi, Kentucky, Alabama, and Connecticut, possibly spurred on by the substantial overhauls that occurred in the Carolinas, are more closely examining their CON laws and weighing whether to make meaningful changes.

The repeal or at least easing of the remaining CON laws and other restrictive rules (e.g., those limiting the type of procedures ASCs can perform) would undoubtedly lead to the development of de novo ASCs and expansion of existing facilities. This would help increase patient access to surgery centers and bring more of their services to those who would benefit.

Hospitals, Private Equity Pursuing ASCs

While the independent ASC remains the predominant surgery center model, we are continuing to see hospitals and health systems establishing or expanding their ASC portfolios, either through acquisition of existing centers or development of de novo facilities. Avanza Healthcare Strategies' most recent survey of hospital and health system leaders found that more than 7 in 10 survey respondents indicated that their hospitals and health systems are planning to increase ASC investments and affiliations. This figure increased from 63% in Avanza's previous survey. Survey respondents identified increasing outpatient surgical capacity as the top reason why their organizations owned or affiliated with ASCs.

It's not just hospitals and health systems pursuing ASCs: private equity firms are increasingly investing in surgery centers in various ways, including investing in ASCs directly, investing in ASC management and development companies, and investing in medical groups that own ASCs. Commercial payers are also taking greater interest in ASC ownership.

Staffing, Anesthesia as Top Challenges

For yet another year, staffing — particularly on the clinical side — remained one of the top challenges facing ASCs. It's become more difficult to recruit and retain the staff surgery centers need due to myriad factors, including increased competition, staff leaving for higher-paying healthcare positions, or leaving healthcare altogether. To help combat staffing challenges, we're seeing ASCs increasingly outsource services that they do not need to perform in-house, including revenue cycle management.

We're also seeing outsourcing of ASC billing helping with other substantial challenges ASCs faced in 2023 and will likely continue to face in 2024, including cash flow, ensuring proper reimbursement and collections, and ever-changing payer rules.

Another ASC challenge that has more recently emerged concerns anesthesia staffing. ASCs are being asked by anesthesia providers to pay stipends, make case volume guarantees, or enter into other agreements that help anesthesia providers increase their revenue to help offset rising staffing costs and decreases in reimbursement. While these types of agreements have been in place with hospitals for many years, they are now becoming common in independent ASCs and increasingly necessary for surgery centers to ensure adequate anesthesia coverage. ASC leaders will need to engage ongoing, transparent discussions with their anesthesia partners in the hopes of determining an arrangement that works for both parties and enables the surgery center to continue providing exceptional care and capitalizing on emerging growth opportunities.

Cybercrime was an ever-present threat in 2023 and will remain so in 2024, making it essential that ASCs continue to place security as a top priority and ensure their vendor partners do the same.

Looking into the crystal ball…

Now I'll share some of the questions on my mind for the year that's ahead of us. With a divided government and upcoming federal election, I am not expecting many significant federal regulatory changes, but I am expecting some big — and hopefully positive — developments for our industry.

• Will CMS surprise us again with more, welcome additions to the ASC-CPL?
• What states will follow the Carolinas in repealing or easing their CON laws?
• Will commercial payers become more aggressive with steering surgical procedures to — and possibly out of — ASCs?
• How will more aggressive investing in ASCs by hospitals, health systems, and other entities further affect the industry?
• How do staffing challenges and other significant challenges transform ASC operations and affect strategic planning?
• How will the challenges ASCs face today influence the development and operation of new surgery centers?
• How will artificial intelligence, as well as further adoption of technology and automation, help surgery centers improve efficiency and performance?
• Will cardiology start making its way into more multispecialty ASCs?
• Will CMS surprise us with another OAS CAHPS delay?

I hope you found my latest summary informative. Throughout the year, the Surgical Notes team monitors and shares information on current events, trends, and developments affecting our ASC industry. These efforts help ensure we can effectively support our clients and their work 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 ([email protected]) 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.