An administrator's outlook on payers, orthopedics and ASCs

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Raghu Reddy, administrator at Cumberland-based SurgCenter of Western Maryland, spoke about payers' evolving attitudes toward spine and orthopedic surgery during Becker's Orthopedic, Spine + ASC Virtual Event on March 18 in the session "The Next 18 months: What to Expect From Payers on Total Joints, Spinal Fusions and More in the ASC."

Click here to view the full interview on demand and access several other fireside chats, panels and workshops during the event.

Note: Responses are lightly edited for style and clarity.

Question: How have payer attitudes toward total joints and spinal fusions changed?

Raghu Reddy: When we started negotiating with our commercial payers, it all came down to the value proposition, the quality scores and outcomes. So we were able to prove to most of our commercial carriers the cost savings that they're going to realize by shifting all the eligible and healthy outpatient joints to our surgery center. One other advantage we had is that we were the only surgery center in the area. So they really helped us with a contract negotiation. We had a one-hospital system, so shifting those healthy joints to the surgery center did prove a tremendous amount of value-add cost savings to the commercial payers. That really worked out in our favor, and we're able to negotiate a favorable contract and since then their attitude has been great. We never had real issues with reimbursement or any of the billing issues when it comes to some of these bigger cases.

Q: Do you expect any changes from private payers in the next one to five years?

RR: There is a lot of data that's coming out these days in terms of different specialties. The private payers used to piggyback on the Medicare approval or what Medicare was doing, but now they're really starting to branch out and take things into their own hands and doing their own studies and looking at the data to approve some of these complex procedures, even before Medicare removes it from the inpatient only list. That trend will continue to evolve. There might be some bundled payment-type agreements that might come out in the future with some of the commercial payers sooner than Medicare. We were able to do some single-case agreements with some of the payers, but I would not say it was all in all, that's the standard across the board. The ASC market is going to continue to evolve. But, when it comes to reimbursement — some of the other payment models and improving the outcomes and creating the overall value for both the payer and the patient, that's going to continue to evolve.

Q: Are you considering any types of value-based payments, or is it still all fee-for-service?

RR: Well, we've been predominantly on fee-for-service historically from the outpatient surgery standpoint. We have not been approached by any payer yet in terms of a value-based approach or any bundled payment, but I'm sure as the market evolves it may continue to lead into the future. That's going to be on the horizon.

I know as of last year CMS has completed a common review on the Comprehensive Care for Joint Replacement Model. One of the things that is important to realize is the financial burden that a center bears if we were to elect or be forced into this bundled payment. So for example, in rural areas, our reimbursement is almost all much lower compared to some of the urban areas. Administrators should think about how much cost savings are we going to realize in the 90 day period by going into this bundled payment-type scenario or other other payment models. That's something that is going to be very subjective. I'm very anxious to know if and when this is going to come and if it's going to be mandatory or elective, and we can go from there.

Register today for the 18th Annual Spine, Orthopedic and Pain Management-Driven ASC + the Future of Spine Conference virtual event June 7-17, 2021.

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