The Rise of the Cardiology ASC

Vertical: Cardiology / ASCs
Author: JC Lupis
Date: May 2021

Single-specialty cardiology ASCs are rapidly rising, and there are plenty of indications that the steep climbs witnessed in recent years will continue apace in the years to come. This article highlights several points of consideration with respect to cardiology ASCs.

Single-Specialty Cardiology ASCs Quintuple in 2 Years

The number of single-specialty cardiology ASCs billing Medicare totaled 88 in 2019 (latest data available), per MedPAC’s March 2021 report to Congress1. That represents a significant rise from 55 in 2018, and an even larger jump from just 18 in 2017.

GHA-Cardiology-ASCs

Source: MedPAC, March 2021

It should be noted that single-specialty cardiology ASCs are still very limited in comparison to other single-specialty ASCs. For example, in 2019 there were more than 1,000 gastroenterology ASCs, and likewise more than 1,000 ophthalmology ASCs. Nonetheless, this serves as a reminder that there is plenty of runway for growth in cardiology.

What’s Fueling the Growth?

Simply put, regulatory decisions are the primary driver of the rise in cardiology ASCs. The shift to outpatient settings began in 2005 when Medicare approved outpatient arterial endovascular interventions. More recently, in 2019, CMS changed the ASC rules’ definition of surgery to include “surgery-like” procedures. This move resulted in the expansion of the ASC list to cover cardiac catheterization and interventional procedures and the addition of 17 cardiac catheterization-related procedures to the ASC list.

Following that move, in its CY 2020 final rule, CMS authorized 6 more procedures that relate to the provision of percutaneous coronary interventions (“PCIs”). Once again, the number of cardiology procedures approved for the list of Medicare-covered ASC procedures expanded significantly. The approval of PCI in ASCs has been called a “watershed” moment2 heralding a rapid rise in diagnostic and interventional angioplasties in ASCs. Recognizing this, ASC companies, cardiology practices, hospitals, payers, and private equity groups are expressing further interest in cardiology in the ambulatory setting.

Meanwhile, technological advances are a secondary driver of the outmigration to ASCs. The development of smaller devices that require smaller incision sites means that bleeding risks have been cut down and incision sites heal more quickly. With ASCs looking to prove their safety and quality, this reduction in the general risk profile of certain procedures bodes well.

What Are the Benefits of the ASC Setting?

There are several benefits to performing cardiology procedures in the ASC setting that accrue to a variety of stakeholders:

Patients

– Like all consumers, consumers of healthcare (i.e. patients) are attracted to convenience and affordability. As such, the ease of access afforded by ASCs, along with the opportunity to schedule procedures in a timely and efficient manner, hold considerable appeal to patients. Something as simple as the ability to park in front of the facility has been cited as a key benefit3. ASCs on the whole are perceived to have a stronger patient experience than hospitals.

Physicians

– More than 90% of ASCs have some physician equity component4, and this allows physicians to have greater control over the work they perform. Moreover, procedures performed in ASCs are shown to save more than a half-hour over those performed in HOPDs5, allowing physicians to conduct more procedures in the ASC setting.

Payors

– The high-quality, low-cost care ASCs provide aligns them with commercial insurers. In terms of ASCs as lower cost-of-care sites, consider that the CMS reimburses ASCs 40% less for angioplasties than it does HOPDs6. Additionally, the average pacemaker is reimbursed in an ASC at roughly 25% of the inpatient rate7. The CMS has itself made the financial case, noting that a migration of just 5% of the 700,000 annual Medicare coronary interventions performed would result in $20 million of savings in Medicare payments and $5 million of savings in patient co-pays.

Cardiovascular-Reimbursement-Rates-ASCs-v-HOPDs

(1) 92920 Percutaneous transluminal coronary angioplasty; single major coronary artery or branch
(2) 92928 Percutaneous transcatheter placement of intracoronary stent(s), with coronary angioplasty when performed; single major coronary artery or branch
(3) C9600 Percutaneous transcatheter placement of drug eluting intracoronary stent(s) (DES), with coronary angioplasty when performed; single major coronary artery or branch

Source: Modern Healthcare (2020), CMS

Pump the Brakes: Barriers Remain

While there appear to be many tailwinds driving the shift to cardiology ASCs, there are still some obstacles to be overcome. There’s the simple fact that state laws supersede CMS’ approvals, and some states are yet to approve the ASC setting: 9, including California (albeit some indications of a loosening approach8) and New York, prohibit PCIs in ASCs9. Others require a Certificate of Need (CON) to participate.

Separately, there are the quirks of the cardiology landscape itself. Unlike orthopedics, for example, which is a strong ASC growth area, the majority of cardiologists are aligned with hospitals and health systems10, giving them less autonomy over such decisions.

Finally, not everyone is hopping on board the ASC train. For some skeptics, the volume of qualified patients may not end up being what it’s hyped up to be. ASCs will need to build up a patient safety record in cardiology; Dr. Dan Murrey, chief medical officer of Surgical Care Affiliates (SCA), has said that SCA will “start with the simplest cases before expanding into the broader population.”11 The contrarian view is then that few PCI patients may be appropriate for the ASC setting, an argument voiced by Dr. Usman Baber, director of the cardiac catheterization lab at OU Medical Center in Oklahoma City, who feels that many patients will have complex comorbities and require a hospital’s surgical backup.12 Applying the most rigorous standards to patient qualification may mean that there are simply not enough patients to justify the ASC investment.

The Hybrid ASC-OBL Model

One way in which cardiovascular ASC operators are combatting potential volume inefficiencies is through the use of a hybrid office-based lab (OBL)/ASC model. OBLs – of which there are more than 50013 – first gained popularity following CMS approvals of outpatient arterial endovascular interventions in 2005 and hiked reimbursement for peripheral vascular interventions in physicians’ offices, in 2009.

Operating as an ASC on designated days and as an OBL on other days, due to CMS rules and requirements, can increase efficiency and profitability for these facilities. On the cost side, dual use of facilities, staff, and relationships with payors (though separate contracts are necessary) are a bonus. On the revenue side, there is more flexibility to perform procedures in the setting which has the higher reimbursement from payors, as there are still some procedures – such as most endovascular cases – that are reimbursed better by Medicare when performed in a non-facility environment.

How Far Could This Go?

In 2019, Bain & Co. predicted that by the mid-2020s, one-third of cardiovascular cases could be performed in ASCs14.

While this was an eyebrow-raising projection, it may end up as an underestimate, as it was made before the CMS’ approval of PCIs in the ASC setting. Now, there is talk that half of cardiovascular procedures may take place in ASCs within the next few years15.

Stay tuned.

In the meantime, download our Cardiology Brief, and if you represent a cardiology practice, please get in touch as we are currently working with an innovative new platform scaling nationally.

For more information, contact GHA Managing Director JC Lupis at jclupis@ghadvisors.net.

Footnotes

1 http://medpac.gov/docs/default-source/reports/mar21_medpac_report_to_the_congress_sec.pdf
2 Modern Healthcare, Medicare payment change will shift lucrative heart procedures out of the hospital, 3/21/20
3 Ibid.
4 Diagnostic and Interventional Cardiology, The Strategic Role of Ambulatory Surgery Centers Cardiology Care, 7/13/20
5 Ibid.
6 Modern Healthcare, Medicare payment change will shift lucrative heart procedures out of the hospital, 3/21/20
7 Becker’s ASC Review, 5 reasons cardiology isn’t moving to ASCs as rapidly as orthopedics, 11/13/20
8 SheppardMullin, The Expansion of Cardiovascular Procedures in the ASC Setting, 5/11/20
9 Cath Lab Digest, Coronary Interventions in the ASC: Now What? Does Your Health System Have an Ambulatory Strategy? 2/5/20
10 Becker’s ASC Review, 5 reasons cardiology isn’t moving to ASCs as rapidly as orthopedics, 11/13/20
11 Modern Healthcare, Medicare payment change will shift lucrative heart procedures out of the hospital, 3/21/20
12 Ibid.
13 Bain & Company, Ambulatory Surgery Center Growth Accelerates: Is Medtech Ready?, 9/23/19
14 Ibid.
15 Cath Lab Digest, Coronary Interventions in the ASC: Now What? Does Your Health System Have an Ambulatory Strategy? 2/5/20