Get Ready for Medicare to Change the ASC Rules

Get Ready for Medicare to Change the ASC Rules

by DONNA SANGIOVANNI, CPC, CHI

Almost 40 years ago, all surgeries were performed in a hospital setting. With the healthcare industry changing, today more then 80 percent of surgeries are done in ambulatory surgery centers (ASCs). This evolution has benefited the patient and the insurance industry in many ways. No longer does a patient need to wait weeks for a surgical date, expect to be hospitalized for many days while recovering, or miss time from work. The patient can receive the same quality care from a highly trained staff and go home the same day.

The birth of ASCs also saved the insurance industry revenue by providing a costeffective alternative. Economy and industry changes have now brought a new challenge to the ASC, including revising a payment system that would result in significant redistribution of payments among ASCs and broadening the scope of procedures done in this setting. Since Medicare rates have remained stagnant for almost a decade, industry leaders welcomed the revision of the payment system.

The Centers for Medicare and Medicaid Services (CMS) was mandated to implement a new ASC payment system by Jan. 1, 2008. In August 2005, CMS began the process by inviting more than 400 ASC staff members, physicians and industry leaders to participate in a teleconference on revising the current system.

Issues raised included adequate payment for supplies, implantable devices, expansion or total elimination of the ASC list and geographic wage index. The general public also became involved in the process. CMS reported receiving more than 8,000 pieces of correspondence. The Government Accountability Office (GAO) conducted a study that compared the costs of procedures done in an ASC to those performed in a hospital outpatient department (HOPD). It randomly selected 600 ASCs to obtain the necessary data and concluded that procedures performed in an ASC setting had substantially lower costs than those done in the HOD.

The GAO recommended that CMS implement a new payment system based on the Outpatient Prospective Payment System (OPPS), taking into account the lower costs of procedures performed in an ASC compared to HODs when determining the ASC payment rates. They have determined that not all surgical procedures on the OPPS list can be performed safely in an ASC. Therefore, they decided not to eliminate the ASC procedure list.

The revised ASC procedure list excludes those procedures that pose significant safety risks or would require an overnight stay for postoperative care. There has been one significant change requiring time limitations: cases no longer need to be less than 90 minutes or have a recovery time of four hours or less in assessing the safety risk of surgical procedures.

So what does this all mean to ASCs? It means that effective Jan. 1, 2008, there will be an additional 790 procedures added to the current ASC list. As my grandfather always said, “If it sounds too good to be true, it usually is.” The truth is that many are low-paying, minor procedures. These procedures are usually done in the physicians’ office. New to the ASC list are CPT® codes 11719 (Nail(s) trimming), 10040 (Acne surgery) and 15850 (Removal of sutures). Industry leaders have expressed disappointment in such additions, explaining that ASCs have found that once physicians acquire the equipment and needed resources to provide a procedure in their offices, they prefer to perform them in that setting. It seems to be a growing trend, especially in pain management and gastroenterology specialties. CMS estimates that the 2008 rates will be about 65 percent of the OPPS. It has implemented a four-year transition period beginning 2008. At that point, the ASC payment rate would actually be a blended amount which would equal 75 percent of the applicable calendar year 2007 payment rate and 25 percent of the applicable calendar year 2008 payment rate. In 2009, it would be a 50/50 blend and in 2010, a 25/75 blend. This will lead to full implementation in 2011.

The phase-in allows ASCs the opportunity to attempt to balance their Medicare case mix between procedures whose rates decrease and procedures whose rates increase. To be better prepared for the upcoming revisions, CMS encourages ASCs to expand their service mix.

Industry leaders argue that the combination of only 65 percent of HOD rates and the lack of a broader ASC procedure list will make this task a challenging one, to say the least. Pain management, eye and gastrointestinal endoscopic procedures are the highest volume procedures under the present ASC payment system.

Pain management and gastroenterology specialties will show the decrease in the first year of the phase-in process. For some ASCs, this is their lifeline, as injections have become popular, accounting for the bulk of their cases. Eye and ocular adnexa specialties will show a small increase for CPT® code 66984 (Extracapsular cataract removal with insertion of intraocular lens). Single-specialty ASCs will feel the impact of the new payment system the most. Some may be forced to consider closing their doors. This would be a downfall in patient care, since it may result in fewer patients getting screening procedures such as colonoscopies.

Also excluded from the ASC list are procedures that can be coded only as an unlisted procedure. Unlisted procedure CPT® codes are used to report services and procedures that are not accurately described by any other, more specific CPT® codes. Industry leaders believe that because Medicare makes facility payments for unlisted CPT® codes under the OPPS, CMS should provide the same treatment to ASCs. This limits the number of procedures that can be done, simply because the procedure does not match a CPT® description. This can lead to incorrect procedural coding.

Inadequate reimbursement for implants/supplies has been a problem for many ASCs. For procedures that are currently reimbursed in the ASC, the cost of the implant will now be included in the OPPS. When the cost of the device is more than 50 percent of the OPPS payment rate, CMS will NOT apply the transitional blend to the device portion of the payment; it will ONLY be applied to the “service” portion of the payment.

If the cost of the device is less than 50 percent of the OPPS rate, the full payment will be subjected to the four -year phase-in and the implant cost will not be carved out from the discounted conversion factor. Separate payment will be made for devices that have pass-through status under the OPPS.

Beneficiary coinsurance will remain at 80 percent for ASC services, with the exception of screening flexible sigmoidoscopy and screen colonoscopy procedures. The coinsurance for these services is 25 percent. CMS will adjust the payments annually, factoring in any changes in technology and available resources utilized in performing the procedures. The arrival adjustment is done by recalculating the relative weights for HODs. This will change the relative weight value for many procedures. ASCs will notice fluctuation, with some relative weight values increasing while others decrease. This, in turn, means the rates will do the same. The ASC conversion factor will be updated by the Consumer Price Index for Urban Consumers in 2010. So, how can you calculate your local rate for each group?

National pay rate 0.5 x local wage index + national payment rate x 0.5 = local rate. As healthcare professionals, we must look ahead to a continued relationship between legislature and the patients who entrust their care to our ASCs. 

The final rule can be viewed at: www.cms.hhs.gov/center/asc.asp