Image by Edar from PixabayFor years, ambulatory surgery centers (ASCs) have operated at a reimbursement disadvantage compared to hospital outpatient departments (HOPDs) and other – often costlier – health care settings.
Yet a growing push for site-neutral payments could soon level the playing field, potentially reshaping the financial landscape for ASCs, hospitals and payers alike.
And Brentwood, Tennessee-based Surgery Partners (Nasdaq: SGRY) is embracing the movement wholeheartedly, according to CEO Eric Evans.
“As a company, we are deeply committed to providing quality and compassionate care in the most cost-effective environment,” Evans said during Surgery Partners’ 2024 fourth-quarter earnings call. “As such, we support efforts to encourage procedures to move to the best site of care, such as our short-stay surgical facilities.”
Broadly, site-neutral payments refer to a payment policy that aims to equalize Medicare reimbursement rates across different care settings for the same medical service. Colonoscopies performed in HOPDs, for instance, are typically reimbursed at much higher rates compared to ASCs despite the fact surgery centers can deliver the same exact procedure safely and more efficiently.
The goal of site-neutral payments, sticking with that example, would be to shift colonoscopies into lower-cost ASCs.
In recent years, the U.S. Centers for Medicare & Medicaid Services (CMS) has taken some steps to shrink the gap between higher-cost and lower-cost settings. For ASCs, these efforts have included reducing reimbursement disparities between HOPDs and ASCs as part of the agency’s annual payment rules.
On top of that, several site-neutral-payment-focused bills have also been introduced in Congress.
The Lower Costs, More Transparency Act seeks to help “people get access to the right care, at the right time, at a price they can afford,” according to the lawmakers who support the legislation.
Another piece of legislation touching the topic is the Site-Based Invoicing and Transparency Enhancement (SITE) Act.
Surgery Partners keeps tabs on these and other site-neutral-payments developments, Evans noted. In its reviews, the company has generally found that site-neutral-payment proposals would not have a negative impact on the business.
“Based on detailed reviews of all the frameworks we are tracking, we believe none individually or collectively will have a material impact on the company’s net revenue or earnings,” Evans said. “More specifically, there are very few procedures performed in our facilities that should be done in a lower-cost site as contemplated in any of the current frameworks.”
The ASC giant would realistically be the beneficiary of site-neutral methodologies, he explained.
“It is more likely that as site-neutrality legislation moves forward, our facilities will be the net beneficiary, as procedures may transition faster from acute care health systems and their outpatient department to the facilities that we own and manage,” Evans said. “To put it another way, we believe our facilities are the solution to the problem our government is trying to solve.”
There are reasons for ASCs to support site neutrality, but there are potential downsides, too.
For starters, in some proposals, site-neutrality wouldn’t necessarily mean ASCs would get more money. Instead, hospitals would just get paid less.
If policymakers push for true site-neutrality across settings, some low-acuity, minimally invasive procedures that ASCs currently handle could migrate to lower-cost physician offices as well.
Site neutrality could also cause consolidation to accelerate. If operating on level playing fields, hospitals and health systems might acquire or partner with ASCs with greater frequency to maintain control over their outpatient revenue.
On its end, Surgery Partners firmly believes the pros outweigh the cons.
“More than likely, we do expect this to be a net tailwind – just from our business standpoint,” Evans said.
