2008 rates for some ASC procedures lower than in Medicare proposed rule

Ambulatory surgery centers (ASCs) still will be paid generally 65% of the hospital outpatient department (HOPD) payment in 2008, as was proposed in August, but the actual payment rates will vary from the ones proposed because the relative weights used are different than those proposed, according to the Federated Ambulatory Surgery Association (FASA).

"We are disappointed that payments for some of the procedures that are most commonly performed in ASCs, like cataract surgeries and colonoscopies, have even lower payments in the final rule than they had in the proposed rule, says Kathy Bryant, president of FASA. "I don't think the issue is really whether or not ASCs are generally being reimbursed at 65%, but the total payments they are receiving.

Because the methodology to determine this percentage was finalized on Aug. 2, 2007, FASA leaders didn't expect the Centers for Medicare & Medicaid Services (CMS) to change this rule, Bryant says. "We remain convinced that CMS had the authority to at least pay ASCs 73.06% of HOPD rates and that by failing to do so, CMS is hindering its beneficiaries access to cost-efficient, high-quality surgical care.

Craig Jeffries, executive director of the American Association of Ambulatory Surgery Centers, says, "We are disappointed that CMS did not further address changes recommended by the ASC industry and will aggressively work with Congress over the next 60 days to provide relief based on elements of the ASC legislation.

The Congressional legislation would pay ASCs 75% of the HOPD rate. A bill has been introduced in the Senate to change the ASC payment system and the method that CMS uses to determine what procedures Medicare reimbursement in an ASC, according to FASA. This legislation is similar to HR 1823 introduced in the U.S. House of Representatives earlier this year. This legislation, named the Ambulatory Surgical Center Medicare Payment Modernization Act of 2007, authorizes ASCs to receive Medicare payments for any surgical service unless Health and Human Services identifies a specific risk concerning a certain procedure being performed in an ASC or an overnight stay is required. "Under the new process, CMS includes all surgical procedures on the ASC list unless a procedure meets one of the several criteria that would justify exclusion, FASA says.

Disappointment, even with 834 additions

The final payment rule adds 834 procedures to procedures that can be performed in ASCs and deletes 17 procedures.

Bryant says, "We are disappointed that some of the procedures we believe should be added to the list weren't added.

The additions include laparoscopic cholecystectomy. [For a list of additions and deletions, go to www.fasa.org/new/#paymentrates2008. At the bottom of the page, click on "ASC List Additions Effective January 1, 2008 (As compared to 2007 ASC List) and "ASC List Deletions Effective January 1, 2008 (As compared to 2007 ASC List).]

The nationally determined ASC rates will continue to be adjusted to reflect differences in local costs using local wage indexes, FASA says. The final rule says 50% of the national rate will be adjusted by the local wage index. Currently, only 34.45% of the rate is adjusted by the local wage index. At press time, FASA planned to post an online calculator that will provide the local payment rate for each procedure on the ASC list when an ASC inserts its local wage index. (Go to www.fasa.org/new/#paymentrates2008.)

CMS has announced that there will be two exceptions to the 65% level of payment. One exception is device-intensive procedures, or procedures that require the use of a device that costs more than 50% of the total ambulatory payment classification (APC) reimbursement, FASA says. For these procedures, the ASC will be paid the same amount as an HOPD for the device, and only the remainder of the APC reimbursement will be discounted to 65% of the HOPD rate, the association says.

A second exception is procedures often performed in physician offices. For 365 of the procedures that CMS added to the ASC list for 2008, payments will be less than 65% of the HOPD payments under the proposed rates, FASA says. These lower payments result from a new limit CMS is imposing on procedures that are performed in physician offices more than 50% of the time, the association says. For these procedures, CMS will limit the ASC payment to the lesser of the following:

  • The payment rate determined using the usual 65% methodology;
  • The amount Medicare pays physicians for the cost of their practice expense when these procedures are performed in the physicians' offices.

Limiting ASCs to the physician office payment can bring significantly lower payments than ASCs would receive if these procedures were reimbursed at 65% of the HOPD rates, according to FASA. (To see a list of procedures that are exceptions to the 65% payment, go to www.fasa.org/new/#paymentrates2008. Under "Exceptions to 65% Device Intensive Procedures, click on "Device Intensive Procedures Effective January 1, 2008 and "Procedures Often Performed in Physician Offices Subject to Payment Limit.)

CMS maintained the four-year transition to the new rates that was proposed. (See graphic in Same-Day Surgery, September 2007, p. 102.) In 2008, as part of this transition, 75% of the payment for ASC procedures will be based on the 2007 rate, and 25% will be based on what Medicare would have paid without the transition.

There will be no 2008 adjustment for ASCs because inflation increases were frozen for surgery center until 2009.

There will be no annual inflation update for 2009, FASA says. "This does not mean that 2009 rates will equal 2008 rates, the association points out. The annual changes in procedures' relative values may cause some rates to go up and to go down, it says. Also, because of the four-year phase-in, the 2009 rates will be different, FASA says. In 2010 and beyond, the ASC conversion factor will increase by an amount equal to the consumer price index for urban consumers, it says. "FASA had argued that the inflation update for ASCs should be the same as the update for hospitals — the hospital market basket — but CMS rejected this argument and left the ASC annual update as it is under the existing system, thus proving the importance of advancing ASC legislation in Congress, FASA says. The proposed legislation links the ASC and HOPD payment systems in an ongoing manner in terms of annual updates.

The final rule was to be published in the Nov. 27 Federal Register.