The GAO Report: A Must-Read for ASC Operators

The GAO Report: A Must-Read for ASC Operators

Our industry has certainly seen its share of reports and studies, and this paper chase is seemingly becoming as important to monitor as your surgeries and procedures are. While they’re not exactly light bedtime reading, these communications will help you understand why it’s more important than ever before to become involved in the political advocacy process in order to fight for your model of healthcare delivery. In late November 2006, the Government Accountability Office (GAO) released a report confirming the appropriateness of linking the ambulatory surgical center (ASC) and hospital outpatient department Medicare payment systems. The report was required by a provision of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 which directed GAO to compare the cost of procedures furnished in ASCs to the cost of those procedures furnished in hospital outpatient departments. Echoing arguments made by the ASC industry for many years, the GAO found that the relative costs of procedures in ASCs and hospitals were closely aligned, but that ASCs had lower costs than hospitals.

According to the report, the GAO determined that the payment groups in the OPPS, known as ambulatory payment classification (APC) groups, accurately reflect the relative cost of procedures performed in ASCs. The GAO calculated the ratio between each procedure’s ASC median cost, as determined by the office’s survey, and the median cost of each procedure’s corresponding APC group under the OPPS (referred to as the ASC-to-APC cost ratio). The GAO also compared the OPPS median costs of those same procedures with the median costs of their APC groups (referred to as the OPPS-to-APC cost ratio). The GAO’s analysis of these ratios showed that 45 percent of all procedures in the analysis fell within a 0.10 point range of the ASC-to-APC median cost ratio, and 33 percent of procedures fell within a 0.10 point range of the OPPS-to-APC median cost ratio. These similar patterns of distribution around the median show that the APC groups reflect the relative costs of procedures provided by ASCs as well as they reflect the relative costs of procedures provided in HOPDs and can be used as the basis for the ASC payment system.

The GAO also identified differences in the cost of procedures in the two settings. The median cost ratio among all ASC procedures was 0.39 and when weighted by Medicare claims volume was 0.84. The median cost ratio for OPPS procedures was 1.04. Thus, the cost of procedures in ASCs is substantially lower than the corresponding cost in hospital outpatient departments.

At only 32 pages, the report is a fairly quick read compared to other studies, and does an excellent job of chronicling the history of the struggles of the creation of a payment system with greater parity. It’s an essential read for any ASC owner/operator who is new to the field and needs a fast update on the key issues and a look at the top 20 ASC procedures billed. To access the report, go to: http://www.aaasc.org/advocacy/documents/GAOfullreport.pdf. 

And speaking of required reading, don’t miss our annual Management Guide, beginning on page 9 in this month’s issue. today’s surgicenter’s Jennifer Schraag has collected a terrific assortment of insider advice to help you run your facility at its peak performance, straight from industry experts.

Until next month, 

Kelly M. Pyrek 
Group Editor, Medical Division 
kpyrek@vpico.com