Site neutral payments for hospitals and surgery centers are on the horizon, but they may not have the positive impact ASC owners hoped for.
Hospital outpatient departments are paid significantly more than surgery centers for the same services, and lawmakers are seeking to close the gap. Surgery center leaders have advocated for higher reimbursement, but instead HOPD rates will likely lower to ASC rates.
Adam Bruggeman, MD, CEO of Texas Spine Center and chair of the AAOS Advocacy Council, said site-neutral payments are a focus for President Donald Trump’s administration and the current Congress.
“I’ve sat down and met with the senators that are putting [site neutral payment policies] together, and I will tell you that the goal is not to bring up surgery center payments. The goal is to bring down hospital payments to surgery center levels, and what does that mean at a large scale for purchasing,” said Dr. Bruggeman during a keynote session at the Becker’s 22nd Annual Spine, Orthopedic, and Pain Management-Driven ASC + The Future of Spine Conference in Chicago, June 19-21. “We talked about the GPOs and having different segments, but what happens when everyone gets paid the same? How is that going to impact vendors and are they going to dig in?”
Hospitals and surgery centers are already dealing with rising costs from vendors and potential for continued increases related to tariffs. If hospitals receive lower payments, they’ll need to control costs in a similar way to surgery centers.
“Everything we purchase is being impacted by tariffs,” said Dr. Bruggeman. “Tarriff policy is going to have a dramatic impact on how things work along with site neutrality. There was some discussion of physician employment as well. What does site neutrality mean for physician employment? Think about the fact that we’re paying physicians currently under hospital systems. We’re paying them largely because we have this massive delta in the HOPD rate for when we perform procedures at the hospital compared to what we do or when we provide services, even clinic services at the hospital for exempted or pre-existing HOPDs, you think about how much extra money they’re making.”
Even relatively common procedures, such as steroid injections, are 2.5 to 3 times higher when done by a physician employed by a hospital than those in private practice because the hospital charges a higher facility fee.
“If we get rid of all of that now and hospitals no longer have any additional money to pay the doctors, what does that mean for employed physicians?” Dr. Bruggeman posed. “What does that mean in states that don’t have any sort of non-compete language that prevents non-competes from occurring? California is a great example of limiting non-competes, but there are either states that are the opposite. They have a lot of large non-compete radiuses that can prevent physicians from being mobile, and what does that mean for the physician workforce. All of those things are sitting here boiling, and I’m waiting to see how that’s going to impact surgery centers and ultimately how those surgery centers function and operate.”
The change in policy and economics around physician employment could spark an influx of physicians joining private practices and wanting ownership in surgery centers. Dr. Bruggeman said lawmakers he speaks to would like to see more physicians owning surgery centers in the future, with the stated goal of making surgery centers busier.
“Tha’ts great, except they have to give us more money to make that make sense because it’s becoming more and more costly to provide that care,” said Dr. Bruggeman.
There could be other positive benefits to site neutral payments, even if they drop HOPD rates to ASC rates because surgery centers have the advantage of already being the lean, low-cost center for care.
“When hospitals are flush, they cause wage inflation. I’m losing staff both in my private practice and surgery center to the hospital because their profit margins are so high that they’ll pay more and more and more,” said Basil Besh, MD, founder of Precision SurgiCenter in Fremont, Calif. “I can’t compete with that. Just leveling the playing field is going to decrease some of that inflation, both in durable goods, implants and staffing”
California recently raised healthcare workers’ minimum wage to $25 in practices with more than 20 physicians. But even if the practice isn’t required to increase minimum wage, they’ll lose employees to hospitals and other practices without a similar bump.
“Even if we don’t get an increase in reimbursement, which I’ll never advocate against, it’s going to stop some of this inflation that we get tagged with because we’re in the same market for purchasing as those [larger health systems],” said Dr. Besh.
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