Becker's ASC Review

15 Executive Briefing Sponsored by: T he shift of more complex orthopedic, spine and cardiology procedures to the ASC has accelerated over the past few months. That transition will likely continue in the coming years with CMS' proposal to remove 266 orthopedic procedures, including 67 spine procedures, from the inpatient only list in 2021. "The migration of higher acuity cases to the ASC will only continue to trend in a favorable direction as it serves not only the interest of the patient, but the payers and providers as well," said Tony Taparo, chief growth officer of Surgery Partners. "Each year, CMS continues to approve more procedures to be done in an ASC therefore allowing the physician to make the determination based on what's clinically best for their patients." The agency added total knee replacements to the ASC payable list beginning in 2020 and aims to add total hip replacements next year. The agency may also eliminate the inpatient only list and revise criteria for the ASC payable list in the future, which would potentially make 270 surgery or surgery-like codes payable in the ASC setting. "These changes are in perfect alignment with our growth initiatives in higher acuity procedures, such as cardiac, orthopedic and spine," Mr. Taparo said. "Despite COVID, we've experienced tremendous growth in our orthopedic and total joint service line. In June 2020, orthopedic cases increased 18 percent and total joint replacements saw a 2.6-times growth compared to the same month the prior year. Overall, the 2020 trend continues to be favorable with a 70 percent increase in total joint cases year-to-date." Surgery Partners currently has more than 180 locations nationwide, working with partners to customize strategy for each facility. The company has realized 10 percent annual same-facility growth over the past five years and now has around 1,500 partnered and 4,000 affiliated physicians. The company also works with health systems and has 12 joint venture facilities with partners such as Baptist Memorial Health Care in Memphis, Tenn., Nashville, Tenn.-based Vanderbilt Health System and UCLA Health System in Southern California. The musculoskeletal service line makes up 44 percent of the procedures Surgery Partners facilities performs, and in June the company reported an 18 percent increase in orthopedic cases year-over-year, despite disruption from the pandemic during the second quarter. CMS' and commercial payers' changing policies, as well as new robotic technology, is expected to propel Surgery Partners' musculoskeletal service line into the future. Commercial payers Commercial payers that aren't already reimbursing for total joint replacements and spinal fusions in the outpatient setting will likely follow Medicare's lead, especially during the pandemic as patients are eager to stay out of hospitals for surgery whenever possible. Payers are also making the payment structure more desirable for members to have surgeries in the ASC. The shift was already underway when the pandemic began. In 2015, case volume trends show hospital outpatient departments covered 60 percent of the outpatient market share while ASCs had 40 percent; Mr. Taparo said today those percentages have flipped. "In the next three to five years, we will continue to see a significant outmigration of cardiac, orthopedic and spine procedures to the ASC setting," he said. Most centers with total joint replacements have been performing them on commercial patients for several years, and payers like Humana have partnered with orthopedic practices and surgery centers to develop bundled payments for total joints and spinal fusions. ASCs are also more likely to pursue bundled payment options as total joint replacements shift from the inpatient to outpatient setting. The changes CMS is making are positive steps for the ASC industry because the federal government is recognizing these procedures can be done safely within ASCs, and potentially result in better outcomes for the patient at a lower cost. The shift will be especially potent for total joint replacements; Sg2 estimates 51 percent of total joints will be performed outpatient by 2026, with many being in the ASC. The 2020 VMG Health Healthcare M&A Report also predicts growth for outpatient total joint volume, hitting 77 percent through 2026. Why Surgery Partners is bullish on total joints, robotics and more for the ASC "In the next three to five years, we will continue to see a significant outmigration of cardiac, orthopedic and spine procedures to the ASC setting." Tony Taparo, Chief Growth Officer, Surgery Partners

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