Is Self-referral Driving Increased Utilization?

Abstract

T his article by Hollingsworth and colleagues is timely and important. These 4 procedures (colonoscopy, endoscopy, and cataract and breast surgery) constitute 75% of all Medicare payments to ASCs. In defined hospital service areas, the opening of an ASC resulted in increased procedure utilization by the Medicare population for what they described as discretionary procedures (cataract surgery, colonoscopy, and upper gastrointestinal tract endoscopy) but no corresponding increase in imperative procedures, such as breast operations. While I trust the accuracy of their data analysis, the use of value-laden terms such as discretionary to describe endoscopy and cataract surgery implies that all of these procedures did not have appropriate medical indications. There are many valid reasons to relocate outpatient procedures to ASCs (cost, convenience, and efficiency), but most insurers reimburse an ASC about 35% less for the same outpatient procedure performed in a hospital. That migration, however, shifts some of the more profitable procedures out of the inpatient setting, leaving hospitals less margin to provide tertiary-level 24/7 care for a less insured patient population with more comorbid conditions. As fee-for-service payments have decreased (or at least not kept pace with inflation), physicians have seen ownership or partnership with ASCs as one method to maintain income. In light of the fact that 83% of ASCs have some form of physician investment, it is reasonable to conclude that at least some of the increase in utilization for some procedures could be financially driven by self-referral to the physician-owned ASCs for procedures with vague indications. It would be naive to think payers or the Centers for Medicare and Medicaid Services do not already know the trend toward increased utilization in ASCs. If we accept that it is less costly to perform outpatient procedures in ASCs and that some physicians may be increasing procedure utilization for financial gain, how will health care reform reconcile these competing interests? One possible outcome is that there will be further tightening of restrictions on physicianowned ASCs and physician-owned specialty hospitals. This result may drive more physicians from private practice toward employment by larger health care organizations that are able to gain a share of the technical fees recovered from procedures.