Market and regulatory changes in the cardiovascular space are leading to the exodus of procedures to lower-cost settings. The migration of these procedures to office-based labs (OBLs) and ambulatory surgery centers (ASCs) has accelerated with the Centers for Medicare and Medicaid Services (CMS) addition of diagnostic heart catheterizations and percutaneous coronary intervention (PCI) to the ASC-covered procedure list (CPL) in 2020. This shift of cardiovascular procedures to the ASC-CPL is expected to continue to grow because of the lower costs the facilities can provide.
CMS continues culling inpatient-only procedure list to allow more outpatient center procedures
The shift of such cases from the hospital to a lower-cost site of care are only going to continue. It began with peripheral artery disease (PAD) shifting to OBLs 2009, and then cardiac rhythm management cases in 2016. In 2019, diagnostic heart caths began to be performed in ASCs. Then in 2020, there was a major watershed moment when Medicare approved PCI stenting for ASCs.
Many expect that the CMS will continue adding other procedures such as electrophysiology (EP) ablations, left atrial appendage occlusion (LAAO), transcatheter aortic valve replacement (TAVR), and abdominal aortic aneurism (AAA) repair to the ASC-CPL. There are currently dozens of ASCs performing EP ablations on commercial patients. As with PCI, commercial payers are paving the way for Medicare to add more procedures to the ASC-CPL.
Approximately 66% of cath lab procedures can currently be comfortably performed in an ASC setting. These include CRM implants, PAD, diagnostic caths and PCI. However, the vast majority continue to be performed in hospital outpatient departments (HOPDs). It is estimated that more than 80% of all HOPD cardiovascular procedures will be added to Medicare’s CPL and then be eligible to be migrated to ASCs by 2030.
How commercial payers are reacting
ASC reimbursement rates in 2023 for all procedures increased on average by 3%. As they did with PCI, before it was added to the ASC-CPL by CMS, commercial payers are giving attention to all of this by already paying for cardiac ablations that are not yet on the Medicare CPL for ASCs.
Last year, Medicare launched an outpatient procedure price comparison tool highlighting member out-of-pocket differentials between ASC and HOPD settings. This tool clearly demonstrates the benefits. It shows, for example, that a common left heart cath’s (CPT 93458) total cost in the ASC is $1,735 with a patient responsibility of $346, versus the same heart cath in a hospital with a total cost of $3,259 and a patient responsibility of $923 (see figure 1 below).
Additionally, bundled payment arrangements via Medicare Advantage are evolving, allowing providers to share savings from the cost differential across surgical sites of care.
Commercial payers are now following CMS’ lead by shifting a greater proportion of cardiovascular procedures they cover to lower-cost sites of care. Notably, United Healthcare has implemented a cardiovascular prior authorization program intended to drive cases out of HOPDs and into ASCs, where services are expected to include additional diagnostic and interventional CV procedures.
These changes, combined with more physician-owned ASCs, direct contracting entities (DCEs) (e.g., direct-to-employer- and health-plan relationships) will have an impact on most hospitals’ care delivery and bottom lines.
Absent a comprehensive physician alignment and back fill strategy, healthcare leaders are looking to avoid major revenue gaps when cardiovascular ASCs open in their area. These expenses can include playing catch-up, scrambling to adjust budgets, capital expansion projects and future projections.
5 strategies to embrace cardiovascular procedure migration to OBLs and ASCs for growth
Banner Health is a health system that supported and facilitated establishment of joint-venture ASC cath lab in Arizona. In its first 18 months of operation, their ASC cath lab volume grew month over month while their hospital volume remained steady. This indicated that total volume increased and remained within the health system.
The system leaders followed five strategies that put smart sustainable, clinically appropriate growth top of mind:
1. Explore integrating physician alignment efforts with cardiologists, interventional radiologists, nephrologists and vascular surgeons. Contemplate joint venture opportunities in ASCs with employed and independent cardiovascular specialists. Create or modify formal co-management agreements to enhance physician engagement, add exclusivity/non-compete, and consider tying the agreement to ASC participation. Share risk with independent cardiovascular specialists in bundled payment and gainsharing initiatives to build relationships and connections.
2. Get creative and differentiate your market position. Consider offensive and defensive strategies against the continued development of freestanding, physician-owned cath labs (both OBLs and ASCs), aggressive private equity activity, and lack of support from splitter physicians in your hospitals. If appropriate, leverage market position as the largest, or best-in-class cardiovascular program and local integrated health system in the region. Align with desirable cardiovascular physicians to create value-based care.
3. Imbed your cardiovascular ASC strategy into your overall health system strategy. Further integrating joint-venture CV ASCs with employed and independent physicians can help to deliver the highest value to stakeholders, especially critical to health systems who have an insurance product. The best way to connect your ASC strategy to physician retention and recruitment plans and hospital outpatient strategies is to create initiatives targeting quality performance improvements. This may include becoming a part of the American College of Cardiology (ACC) National Cardiovascular Data Registry (NCDR).
4. Actively market program benefits. Highlight new technologies like the transradial vascular access approach for heart caths and no-contrast ablations coupled with high-quality outcomes, experience, access and convenience. Promote peripheral vascular disease (PVD) screening on and off campus. Focus on service-line additions such as critical limb ischemia (CLI) to your peripheral arterial and venous programs. Seek market share gain by being first to market with a CV ASC.
5. Actively pursue payer and consumer value across all sites of service. As more complex cases (such as left side ablations and structural heart) are permitted in ASCs, payers are actively highlighting price differentiation in order to influence and steer their beneficiaries. However, many patients will continue to require hospital-level services. Expanding structural heart, CLI and complex PCI programs can help offset the shift of routine cardiovascular procedures outside the hospital setting. Hospitals will need to commit to appropriate site-of-care selection and further compete on value (quality, cost and experience) because payers will continue to compare HOPD and ASC prices, which will create more competition and shift market share.
The time to begin planning for CV ASCs is now
The outmigration of cardiovascular procedures to lower-cost settings is driven by complex clinical and financial forces from value-based care and reimbursement to physician retention and patient satisfaction. With the proper strategy, risk tolerance, business insight and management, a health system can see its total procedure volume increase, allowing them to maintain a healthy bottom line as well as care delivery.
About the author: Marc Toth is the market president for Atlas Cardiovascular Services at Atlas Healthcare Partners. The company sets up and manages ambulatory surgical centers. He also serves as a board member for the Ambulatory Surgery Center Association.