EXECUTIVE SUMMARY

The Centers for Medicare & Medicaid Services (CMS) has published its latest changes that affect surgery centers in the CY 2020 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System Proposed Rule.

  • Published July 29, 2019, the proposed rule incorporates changes directed by President Trump’s executive order on improving price and quality transparency in healthcare.
  • The proposed rule also would remove total hip arthroplasty from the inpatient-only list so the procedure could be performed for Medicare payment in the outpatient setting.
  • Total knee arthroplasty, knee mosaicplasty, and some coronary intervention procedures would be added to the ASC-covered procedures list.
  • The American Hospital Association expressed concern about the proposed changes, arguing that mandating the disclosure of negotiated rates between insurers and hospitals is the wrong approach.

The recently proposed Medicare hospital outpatient payment rules encourage site-neutral payment between some Medicare sites of service and push for price transparency in hospitals.

The CY 2020 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System Proposed Rule, published on July 29, 2019, is moving toward more transparency, as directed by President Trump’s executive order on improving price and quality transparency in healthcare.1

The rule would remove total hip arthroplasty from the inpatient-only list, making it eligible for payment by Medicare in the outpatient setting. Total knee arthroplasty, knee mosaicplasty, and three more coronary intervention procedures could be added to the ASC-covered procedures list. OPPS payment rates could be updated by 2.7%. Further, CMS is proposing to continue to pay an adjusted amount of the average sale price, minus 22.5% for certain separately payable drugs or biologicals acquired through Section 340B of the Public Health Services Act.

The Centers for Medicare & Medicaid Services (CMS) gave hospitals and others until Sept. 27, 2019, to comment on the proposed rule. “We see the new provisions in the proposed rule as carrying forward what we see as a good trend of CMS recognizing the quality and value of surgery center setting and increasingly moving procedures our way,” says Bill Prentice, JD, MGA, CEO of the Ambulatory Surgery Center Association. “It’s nice that CMS is seeing the data and proposing to allow ASCs to perform total knee procedures for Medicare patients. They also proposed to move some cardiac procedure codes to our payable list.”

For both orthopedic and cardiac procedures, CMS has proposed allowing ASCs to perform these for Medicare patients after such centers have demonstrated some evidence those procedures have been performed safely in those settings for patients covered by commercial insurance.

“We’ve seen a slow and steady increase in the number of surgery centers that are doing procedures like total joints, and they’re slowly increasing as clinicians are comfortable with finding the right patients and bringing them to the surgery center,” Prentice observes. “We’re making sure we have the right protocols to bring patients home within 24 hours.”

The change toward greater transparency will require hospitals to make their standard charges public and online. Each hospital must list all standard charges for items and services provided by the hospital, including negotiated charges for some services and charges for diagnosis-related groups (DRGs).

Shortly after CMS released details of the proposed OPPS rule, the American Hospital Association (AHA) expressed concern in a statement.2 “Mandating the disclosure of negotiated rates between insurers and hospitals is the wrong approach,” AHA CEO Rick Pollack said in the statement. “Instead, it could seriously limit the choices available to patients in the private market and fuel anticompetitive behavior among commercial health insurers in an already highly concentrated insurance industry.”

Hospitals that serve vulnerable communities will suffer under the proposed rule’s continuation of cuts in payments for 340B drugs, according to Pollack. “The AHA, along with other hospital associations and member hospitals, successfully challenged the previous cuts to the 340B program in court,” he said. “Now that the court has ruled that those cuts are illegal and exceeded the administration’s authority, we urge CMS to refrain from doing more damage to impacted hospitals with another year of illegal cuts.”

Further, Pollack argued the entire proposal exceeds the administration’s legal authority and should be abandoned. (Editor’s Note: AHA’s media office said that no further comments or interviews would be available regarding the proposal beyond Pollack’s statement.)

From the ASC perspective, the proposed rule’s biggest challenge involves Medicare payment for procedures added to the ASC list. “The barrier that we foresee, based on the proposed rule, is that Medicare payment for total knee is low,” Prentice says. “Most surgery centers will receive significantly lower payment than what they’re receiving from commercially insured patients. I suspect my members will want to submit comments on what an appropriate payment will be. The closer it is to payment on the commercial side, the quicker they will want to bring those patients to the ambulatory surgery center.”

ASCs’ payments for surgeries involving implants already are challenging for their bottom lines. For instance, sometimes the payment could be less than the cost of the implant, Prentice notes. “We’ve been working with CMS to see if they can pay separately for the procedure and the implant/device,” he says. “We’re working with CMS so that more of these device-intensive procedures, when done in the ASC, have a device cost that is not a barrier to bringing the surgery to the surgery center.”

Also, there remains a reimbursement discrepancy between hospital surgeries and ASC surgeries. “ASCs are paid about 51% of what the hospital-based surgery centers receive,” Prentice says. “It varies by region, but, on average, about half of what the hospital department receives is paid to ASCs for the same procedure, and that’s not changing.”

Considering this reality, ASCs will focus on adding more Medicare surgeries to their schedule if the reimbursement makes sense financially. “While we can focus on newer procedures like total knee and total joints, the thing is that so many common procedures, like colonoscopies, still are not performed on Medicare beneficiaries in ASCs,” Prentice says. “They’re not being performed in surgery centers because the reimbursement is too low.”

If more of those types of procedures migrated to the surgery center, then Medicare could save billions of dollars each year, he says.

REFERENCES

  1. CMS.gov. CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS-1717-P), July 29, 2019. Available at: https://go.cms.gov/2ztqJ00. Accessed Aug. 28, 2019.
  2. American Hospital Association. AHA Statement on Proposed CY 2020 OPPS Rule, July 29, 2019. Available at: http://bit.ly/2ZtVtwt. Accessed Aug. 28, 2019.