The Migration of Cardiology Services to the ASC/OBL Away from Hospitals

As an international expert on healthcare business administration, and in particular, surgical business development, I encounter many regulatory issues associated with which procedures may be safely performed in any given surgical facility setting.

The out-migration of cardiology procedures from the inpatient to the outpatient setting also of concern and critical for my work in health tourism program development around the world. Not every surgical procedure that a facility or specialist wishes to "sell" to medical travel patients should be performed in the facility setting they plan to promote. I have, at times, nixed certain procedures being performed in ambulatory settings because they were too far (in time, not necessarily distance) from an inpatient facility with a transfer agreement, and were performing procedures under general anesthesia without a place to transfer patients easily in the event of a complication such as malignant hypothermia.

Here in the USA, where I live and work more frequently than in other countries, cardiology is undergoing tumultuous change from the inpatient and outpatient "hospital" setting to the ambulatory surgical setting. As a part of this change, a new designation of a hybrid surgical setting is the ASC/OBL (which stands for ambulatory surgery center/office-based lab).

In the case of cardiology, between 2009 and the present day, many states along with CMS have approved a significant number of cardiology procedures now eligible to be performed (and reimbursed) in the ambulatory surgery center (ASC) setting. Prior to that, for patients on Medicare and Medicaid, CMS would not pay for the procedures to be performed outside the hospital setting.

Cardiac catheterization and interventional procedures traditionally aren't technically considered "surgery," so that's why they weren't on the allowed ASC list in the past. They were allowed in the hospital outpatient department setting and some also allowed in the office-based lab (OBL) setting. In health tourism, I have yet to be shown a "haemodynamic" lab (the term widely used throughout Europe and Latin America instead of "cardiac cath" lab, and therefore an SEO and digital marketing dilemma for health tourism shoppers) outside a full hospital setting, and I've toured thousands of hospitals, clinics and other healthcare facilities in 117 countries on 5 continents.

The initial impact of this affects pricing and costs to consumers and third-party payers (employers, unions, health insurers, government payers, and association health plans). In the past, when limited to only the "hospital" setting, So when the procedure is moved away from the hospitals, their up to 80% margins also "leave the building".

How the out-migration of cardiac catheterization and interventional radiology procedures affects business development strategy for ASCs, hospitals and health tourism programs

The out-migration of these popular and frequently needed cardiac catheterization and interventional radiology procedures adds a new dimension to the affordability of US ambulatory surgery centers. This is especially true when they offer transparently priced, bundled surgical options to the marketplace in the ASC/OBL setting. Domestic medical tourism also enjoys a stateside boost in volumes and revenues.

International medical tourism suddenly = higher risks than remaining closer to home

At the same time, the out-migration to AC/OBL also renders the former attractiveness of the cross-border medical tourism price savings rationale for catheterization and interventional procedures performed outside the USA, essentially irrelevant - and actually more risky.

Why more risky, you ask? Because long flights and vascular/cardiac compromised patients probably shouldn't fly economy seats for 30 hours. But that's a topic for surgeons, seasoned case managers and medical tourism coordinators trained in altitude physiology to address. The risk of complications increases when lay facilitators who have never developed any competency in altitude physiology simply use price and the commissions they'll be paid as the basis of medical tourism destination selection.

And for those who would travel internationally to access needed cardiac catheterization and interventional radiology procedures, they may require transition to low molecular weight heparin (e.g. Lovenox?) which requires self-administration of injections into the abdomen, but at a high retail cost. Lovenox? runs about $100 per syringe ($1000/box for a five day supply) in the USA, unlike the pricing along the French Riviera where the price is about $7 per syringe (USD $70/box for a five day supply). (Pharma tourism anyone?)

For my untrained and novice lay medical tourism readers and followers, Enoxaparin is used to prevent and treat harmful blood clots. This helps to reduce the risk of a stroke or heart attack. This medication helps keep your blood flowing smoothly by lowering the activity of clotting proteins in the blood. Enoxaparin is an anticoagulant, also known as a "blood thinner." It is a type of heparin with a low molecular weight. If you didn't study chemistry in college, that phrase will be meaningless to you. If you have no competency with medical terms, science terms, anatomy, general and altitude physiology, and view medical tourism as a form of website and SEO business, you won't last long in the business of medical tourism unless you either learn these things and the surgeries you'll be coordinating, or hire someone who has this knowledge.

Conditions which increase your risk of developing blood clots include certain types of surgeries (such as knee/hip replacement, abdominal), long periods of being immobile - as in an economy seat on international flights, certain types of heart attack, and a specific type of chest pain called unstable angina. For some medical conditions, enoxaparin may be used in combination with other "blood thinners.

The above paragraph may also be a compelling reason why US employers and unions (and their underwriters and reinsurers) may not view international medical travel and patient redirection with as much acceptance and enthusiasm as the Medical Tourism Association would like you to believe in their syndicated op-eds and advertorials. It is also why those same employers and insurers would favor domestic health travel to U.S.-accredited ASCs, offering transparent, bundled pricing for cardiac catheterization and interventional radiology procedures and high quality and safety settings with shorter flights for their patient redirection programs over (formerly) lower international treatment destinations.

In the USA, state rules affect the implementation of CMS site of service rule changes

The most interesting regulatory issue is that each state is at liberty to mandate what types of procedures can be performed in an OBL versus an ASC. That also touches on signage and representation to the public at large, which touches on marketing, advertising, and ultimately, surgical business development. Many people in healthcare tend to be unaware that state rules supersede what CMS has approved. So if the ASC hires a consultant who does not know this, that consultant tends to view ASC business development strategy and service line expansion very differently from how I assimilate regulatory compliance and recommend a particular action when consulting across the entire USA. For example, New York says any cardiac catheterization or percutaneous coronary intervention must be done in a hospital. So the State of New York as a domestic medical tourism destination for cardiac catheterization or percutaneous coronary intervention will always cost more than if the patient were redirected to an ASC/OBL elsewhere at the cost of a short flight or drive.

Anesthesia services are also a consideration

Non-invasive diagnostic procedures such as those performed in the OBL don't require general anesthesia. The physician is usually reimbursed for a technical component in addition to the reimbursement for the professional services. That's usually an indicator of when a procedure can be done in the OBL, which has been assigned place of service (POS) 11.

Insurance reimbursement changes

The Medicare rates are set by fee schedule that is essentially non-negotiable. The exceptions are Medicare Advantage and Managed Medicaid. Managed care and cash pay are entirely different animals.

Commercial insurers tend to pay for cardiac catheterization or percutaneous coronary intervention services in the ASC setting and did so much sooner than CMS. You've seen what has happened in the case of knee and hip replacement surgeries with BCBS and UnitedHealthcare. They now redirect patients away from hospital unless there is documented medical necessity for the patient to have the support and backstopping of a full service hospital due to comorbidities that exceed the ASCs ability to safely perform the procedures under any anesthetic plan.

The new codes added to the ASC list in 2019 and 2020 were not "surgery" CPT codes, so many of them were not listed on commercial payer lists creating billing and collections hassles for ASCs. Codes assigned to site-of-service code POS 11, performed in OBLs, were on the approved commercial payer lists.

In the ASCs where I work as their part time business development director or consultant, several have decided to pursue a service line expansion to be a hybrid ASC/OBL. This required credentialing, privileging of some new physicians and surgeons, purchase of certain technologies, and signage that can be placed and removed on different days. The ASC/OBL is then licensed and operated as an ASC on a couple designated days in a week and then will operate as an OBL on the other days of the week. CMS doesn't allow an ASC to operate as an OBL at simultaneously. This is because ASC cases that require general anesthesia have to be completely compliant with ASC rules.

One other consideration that I am running into an lots of locations is that the big hospital system up the street has contracted with the commercial payers and others and have threatened disruption of their network panels and contracts if the payer contracts with the ASC/OBL for competing services that the hospital wants to monopolize. Yes, monopoly is illegal, but do you have the financial means and wherewithal to fight such a legal battle? Because I am learning that just because it is legal and otherwise feasible to add these services, you cannot assume the payers will be able or willing to add them to your contracts.

So if you are interested in pursuing ASC/OBL cardiology service line expansion...

First let's chat about the elephant(s) in the room before you get your heart set on anything.

1. We'll first need to review your state rules to determine which cardiology case types you can't do in your OBL that are ASC-eligible
2. Then I need to review review space requirements and the technology you have already in use.
3. You don't need me to review your capital requirements any MBA who understands healthcare and ASC finance can do this and probably develop a pro forma without much outside assistance.
4. I tend to focus my analysis on more niche specialty matters such as your payer mix. My payer mix analysis is usually very different from what other consultants do becaus I review the contracts for certain hints, opportunities, loopholes and details at a far more granular level. I also review or develop and then review "payer report cards" for hassle factors and profitability by payer, by product line.
5. If you are considering the pursuit of medical tourism and patient redirection by employers, unions, insurers and health plans, the on-site evaluation then includes a local area ground support analysis of hotels, airport and transportation services and other considerations that I cannot perform from a distance and do my best work.
6. As a former OR nurse, an additional level of differentiation I leverage is my knowledge of surgery, procedures, instrumentation, implantables, medications, and other clinical knowledge. I've been building transparently-priced bundled case rates for more than 25 years in both the inpatient and outpatient settings. If you are planning to create transparently-priced bundled procedures, and will be using high-cost implantables, it's important that you understand the cost structure before simply setting prices.
7. I'n my work as a developer of integrated health systems, IPAs, PHOs and MSOs over the past 29 years, I've learned how to adapt these models to the ASC setting. You'll need a specialized document set and negotiated contracts with the independently-contracted surgeons, IR specialists, and anesthetists. They must assign their billing and collection for the bundled price procedures to the ASC/OBL in order for the ASC/OBL to bill the bundled case rates and for the ASC/OBL to pay them from the proceeds. Two considerations: Can the medical professionals moonlight from their "day jobs" if they are employed by your local hospital or health system during the week? If you are near a state border are they licensed in your state? That will take advance planning and time. To bill on their own for non-bundled cases, they will need to update their paperwork with CMS, their professional liability insurer, all their managed care and other contracts, and may even need to set up a new LLC, PLLC or corporation with a new tax ID so that payments for ASC/OBL work don't get paid to their regular day job employer or group practice if that's not the intention. And if they want to walk out the door with check in hand at the end of their block time, you'll need contracts that pay you on or before the date of service. Otherwise, if you advance money to them as independent contracts, you'll run afoul of IRS regulations for independent contractors.
8. For ASCs where adding the ASC component could give rise to organizational and governance structure modifications, we must sit down with the shareholders and board to discuss equity allocation if there are multiple partners, which may include physicians, a management company and/or a hospital and implicate hospital privileging at the designated transfer hospital.

One deficiency I've noted across the nation is that many OBL administrators or executive directors lack a true grasp of how to analyze the configuration of the OBL's average daily book of business and compare that to what the organization would generate from a day as an ASC. This is because the same procedure codes are paid higher in the OBL and lower than what is often paid to the ASC. Seems counter-intuitive? It's complicated. But not impossible.

New procedures that can be performed within an ASC can provide an uptick in revenue. But that doesn't always translate to what may be necessary to cover your daily rental for facility, equipment and staff to operate on that block day. You may choose to do as many have done in recent months, operate the ASC/OBL hybrid on a Saturday while the ASC operates on Monday through Friday. But... are the patients available to come in on the Saturday you run the ASC/OBL?

In my projects, the ASC/OBL hybrid runs one Saturday per month, and to scale will open a second Saturday. But religious, cultural and other considerations may get in the way of operating and scheduling patients on a Saturday. For example, in a predominantly Seventh-Day Adventist or Orthodox Jewish community, Saturdays could be a non-starter. But if you eliminate block time for more lucrative cases that were scheduled during the week to shut down and function as the ASC/OBL on a weekday, what is the lost opportunity cost?

So there you have it. New ways to deliver healthcare give rise to new opportunities, the potential for lower prices, more efficient and effective use of facility space, income diversification and other benefits to ASC shareholders, surgeons, IR and anesthesia. But there is more to this than just plug in a C-arm and start doing cases.

I hope this article has provided you a little more information on the topic of cardiology out-migration from hospital to alternative settings, a bit on medical travel and domestic patient redirection, on revenue generation opportunities and on the matters of developing and promoting transparently-bundled case rates for cardiac catheterization and other percutaneous interventional diagnostic and treatment cardiovascular services.

If I can be of any assistance in your strategic or business development efforts, please call on me through my office at (800) 727 4160, toll free.