Under proposed rule, ASCs would be paid 62% of the hospital OPD rate
Viability of surgery centers questioned under proposed cuts
In a first step toward a new ambulatory surgery center (ASC) payment system, the Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would pay ASCs 62% of the hospital outpatient department (HOPD) rate, beginning Jan. 1, 2008, with a two-year transition period.
The 62% is a disappointing number at best, says Kathy Bryant, president of FASA. "I don't understand how anyone thinks we can provide the same procedures as hospital outpatient departments for that much less," Bryant says.
Many ASCs, particularly ones that are single specialty, won't be feasible at these rates, she maintains. ASCs can't hire nurses at 62% of the hospital rate, and they can't pay medical suppliers 62% of what the hospital pays, Bryant points out. Gastrointestinal procedures and pain management procedures will receive some of the largest cuts under this plan, she says. "The irony is that if those procedures are sent back to the hospital, it will cost Medicare more money," Bryant says.
The 62% figure was selected because CMS officials claim it's a budget-neutral number, but Bryant points out that ASC rates have been frozen for years. "We think this is a broad interpretation of budget neutrality," she says. "We think CMS will save more money if they pay us more so we can be viable competitors, and that's where we want to focus." According to sources, a coalition of industry groups is working to refute the budget neutrality figures.
The two-year phase-in also is a disappointment, Bryant says. "It's taken CMS more than two decades to change the payment system, but they expect ASCs, most of which are small businesses, to adjust," she says. Also, the phase-in period actually isn't two years, she maintains. For calendar year 2008, CMS proposes to phase in the new ASC payment rates as a blended payment equal to 50% of the applicable calendar year 2007 payment rate plus 50% of the applicable calendar year 2008 payment rate. "You get mixed rates for one year; and then the next year, you're fully implemented," Bryant says.
No safety net for surgery centers
Craig Jeffries, executive director of the American Association of Ambulatory Surgery Centers in Johnson City, TN, adds his voice to Bryant's criticisms.
"The level of payment reduction for high-volume Medicare procedures is significant, and the proposed two-year transition does not provide any safety net for affected centers," he said in a prepared statement.
Also, despite the fact that ASC rates will be based on hospital rates, ASCs will not receive annual payment rate updates, the same wage index adjustment as HOPDs, or the same add-ons that hospitals receive for innovative pharmaceuticals, medical devices, and implants. Instead, CMS would continue to adjust the national ASC payment amounts to reflect geographic wage differences using the hospital inpatient prospective payment system (IPPS) wage index.
"We had argued that if we are paid based on the hospital system, everything needs to be the same," Bryant says.
ASCs will be paid the lower of the ASC rate or the physician rate, she says. Bryant says that it is interesting that CMS doesn't want procedures to migrate from physician offices to ASCs, which will affect about 280 procedures. "Our rates could be very different from hospitals', even less than 62% of the HOPD rate," she says. Essentially, CMS officials are saying that procedures can migrate to hospitals, which are more expensive, but not ASCs, Bryant maintains. "The bottom line is that where the procedure is performed needs to depend on what that particular patient needs," she says.
ASC payment rates under the revised system would range from $3.68 to $16,146.03, based on 221 ambulatory payment classification groups (APCs). In contrast, the current nine payment groups range from $333 to $1,339. Medicare will continue to pay ASCs 100% for the first procedure, then 50% for each subsequent procedure, Bryant says.
Reform of the ASC list process
CMS proposes changing the criteria for how additions are made to the list of ASC-approved procedures. In past communication about the change, CMS had indicated that procedures would be excluded if they posed a significant health risk to the patient or required an overnight stay. These criteria are listed in the proposed rule, which indicates that an overnight stay is defined as one that is midnight or later.
Bryant questions whether midnight is a good defining point. "Is there any difference for a patient who stays to 11:59 than one who stays to 12:15?" she asks. "Arbitrary time lines and regulations create issues."
The proposed rule also says procedures added to the ASC list must not be on the inpatient-only list, have been performed more than 80% of the time in an inpatient hospital setting in 2005, involve major blood vessels, involve prolonged or extensive invasion of body cavities, involve extensive blood loss, and be emergent or life-threatening in nature.
What is considered "safe" changes over time, based on medical technology, Bryant says. "By putting in criteria to define what is safe, even if they are good criteria in 2008, they may be bad criteria by 2010," she says. Instead, the criteria should be simply whether the procedure is safe, Bryant says.
Officials with the American Hospital Association (AHA) are raising their own concerns with the proposed change. "We want to really look at methodology they're using to determine which items are not covered in an ASC," says Don May, vice president for policy at the AHA's Washington, DC, office. "We definitely have concerns about inappropriate use of ASCs for what should be [hospital] outpatient or inpatient procedures."
Many of the AHA's concerns revolve around surgery centers that may need to transfer patients for inpatient care, but that may not have transfer agreements in place or send medical records for the patients. "The more that complicated procedures are done in ASCs, the more we need better mechanisms to communicate with us, so the emergency department knows what drugs they had, for example, and how to care for the patient most appropriately," May says.
The news in the proposed regulation isn't all bad, Bryant says. "CMS staff members clearly have spent a lot of time working on these issues," Bryant acknowledges. However, the proposed rule needs extensive improvement, Jeffries said. "AAASC will work closely with our members and ASC and physician leaders over the next 90 days to prepare specific comments on the CMS rule and to educate members of Congress on the potential impact of the proposed rule on Medicare beneficiaries, ASC providers and the Medicare budget," he says.
Also, FASA has a Feedback Form on its web site which any surgery center managers can use to submit comments on procedures they think should be added to the ASC list. (Editor's note: Go to www.fasa.org/Feedback.doc.) Bryant says, "I think we should expect some changes."
Also, industry groups are still pushing the Ambulatory Surgical Center Medical Payment Modernization Act (S 1884 and HR 4204). That bill would have ASCs receiving 75% of the HOPD rate and would make policies more parallel between the two payment systems. "The [Sen. Mike] Krapo bill is more straightforward, and we think fairer," Bryant says.
Resources
A copy of the proposed rule can be found at www.fasa.org/CMSproposal.pdf. The rule also was to be published in the Federal Register on Aug. 23, 2006.
More information on the proposed rule can be found at:
- FASA's web site: www.fasa.org/proposed.
- American Association of Ambulatory Surgery Centers web site: www.aaasc.org/advocacy/MedicarePaymentProposedRule.html.
To comment on the proposed revised ambulatory surgery center payment system, comments must be received by Nov. 6, 2006. Please refer to file code CMS-4125-P. To comment on all other sections of the proposed rule, comments must be received by Oct. 10, 2006. Please refer to file code CMS-1506-P. You may submit electronic comments at www.cms.hhs.gov/eRulemaking. Attachments should be in Microsoft Word (preferable), WordPerfect, or Excel. Or you may mail written comments (one original and two copies) to: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-4125-P or CMS-1506-P, P.O. Box 8011, Baltimore, MD 21244-1850.
For further information on ambulatory surgery center issues, contact:
- Dana Burley, Centers for Medicare & Medicaid Services. Telephone: (410) 786-0378.
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