Long-awaited Medicare regulations bring some good, more bad for ASCs

Your reimbursement staff may need extra help

[Editor's note: On June 12, the Health Care Financing Administration (HCFA) in Baltimore released its much-anticipated proposed rules pertaining to ambulatory surgery center (ASC) reimbursements. (For information on how to access this document, see resource box, p. 50.) This document is part of HCFA's move toward a prospective payment system for outpatient services. Outpatient Reimbursement Management asked several experts, including a HCFA representative, to discuss these changes and their potential impact. At press time, HCFA officials expected to release the proposal for hospitals' outpatient facilities later this summer. More articles about these regulations will be published in future issues of ORM.]

First, the good news: ASCs now may be able to add electrocorporeal shock wave lithotripsy to their list of Medicare-reimbursed procedures, and it will be reimbursed at a rate of $2,107. The proposed rule would take effect Jan. 1.

"It is an incredible benefit for ambulatory surgery centers now to bill out for the procedure," says Marjorie Blouin, RN, director of surgical services for Frederick (MD) Surgical Center. The multispecialty center performs about 4,400 procedures a year.

The other good news is that under the proposed rule, Medicare no longer would use time limits on operating, anesthesia, and recovery as a basis for adding procedures to the ASC list. This change might open up new procedure possibilities.

"That has to help tremendously," says Doug Borden, RN, administrator for the Mercy Ambulatory Surgery Center in Fairfield, OH. The center performs about 11,000 procedures a year.

"There are a lot of procedures we [surgery centers] do that last longer than one and a half hours, which is the current magic cut-off," Borden says. "And there have been a lot of procedures that didn't go to outpatient centers because of that cut-off time, so I think that's a big plus."

However, ORM has spoken with ASC administrators and other experts who say the proposed regulations would negatively affect many ASCs.

"Looking at the tables, it's clear that payment rates for a number of common procedures are going to go down," says Randy Fenninger, executive vice president of MARC Associates, a Washington, DC-based lobbying firm that represents a variety of interests in health policy and Medicare.

"That indicates a hit on revenues, and that's obviously something you're going to have to worry about because it is revenue that allows you to maintain the quality of care and to bring on new technology," Fenninger adds. Fenninger also is the Washington, DC, representative for the Baltimore-based American Urological Association and the American Society for Gastrointestinal Endoscopy in Manchester, MA.

Specialty centers may have most difficulty

Some ASCs that perform procedures in one specialty area may suffer the worst damage from the proposed changes. For example, the new rules propose discontinuing the current practice of separately reimbursing ASCs for intraocular lenses at $150 per lens.

"For [ophthalmology] centers, that is possibly a serious blow," says Barbara Smith, administrator of Frederick Surgical Center.

Another negative change is that HCFA, while proposing the addition of 422 procedures to the ASC list, has proposed deleting 203 procedures that some centers may have been depending on for revenues, Smith says. (See list of additions and deletions to the list, enclosed in this issue.)

"We are pleased to see they have added that many different ones, but it's the subtraction that is going to be a stumbling block," Smith says. "Some of the procedures were deleted because they are done in a doctor's office so much."

While the physician's office might be the appropriate setting for many patients, there are other patients who need more clinical care, she explains. The physician might decide their procedures should be done in an outpatient surgery center, Smith says.

Reimbursement managers will find they may need to attend many more seminars to learn how to change from the current eight-group procedure classification system to a proposed 105-group ambulatory payment classification (APC) system.

"We're going to take advantage of any of the seminars that are coming up because we want to feel very comfortable with what we're doing," Smith says, adding that the National Healthcare Consortium in Alexandria, VA, has been holding seminars on the topic. (See source box, at right.)

Frederick Surgical Center likely will hire some temporary accounting and data-entry workers to help the current staff with the analysis of APCs, Smith says.

Borden says Mercy Ambulatory Surgery Center probably will not need to hire new staff to handle the APC system. "It's going to slow the process down, but that's not uncommon anytime they make changes like that," he says. "Until we can catch up and train everybody to the new system, there will be some lag time."

HCFA is switching to APCs so procedures will be grouped based on similar characteristics, according to a HCFA representative who is not identified by name by HCFA policy.

The current system puts various surgical procedures in one payment group based on their having similar resource costs. The new APC system will make each group clinically coherent, so one payment group, for example, will not have an upper gastrointestinal endoscopy grouped with a hernia repair, the HCFA representative says.

HCFA's goal is to use the same method of grouping codes for both ambulatory surgery centers and for hospital outpatient surgery centers, although the rates may not be the same.

New technology may be left behind

HCFA's proposed reimbursement changes are not giving enough financial consideration to the rapidly changing technology that is making it possible for greater numbers of surgeries and treatments to be conducted in an outpatient setting, Fenninger maintains.

For example, surgery centers can treat benign prostatic hypertrophy, an enlargement of the prostate gland that is common among older men, with a new thermal therapy. The therapy reduces the tissue size so the growth no longer is pressing on the urethra and affecting urinary flow, Fenninger explains.

It has the same outcome as two other common treatments, including the use of medication men must take permanently and an inpatient surgical procedure that removes prostate tissue, he adds.

The advantage, however, is the thermal therapy may be done in an outpatient setting, which makes it less expensive than the more common surgical technique.

The problem is ASCs have not been given any incentive to offer this procedure because Medicare reimbursement does not pay enough to cover its expensive equipment and supplies costs, Fenninger says. Each procedure uses a $600 to $800 disposable electrode.

"There's a great deal of concern that the inadequacy of payment rates for physicians and ASCs is going to hamstring the spread of these new technologies," Fenninger says. "If you can bring in a new technology that is cheap, that's great; but if you bring in a technology that is expensive, then the system does not seem to have any way of accommodating it."

Fenninger says the national associations he represents will conduct their own rate surveys to see if HCFA's numbers, which were based on HCFA's 1994 surveys, accurately reflect current cost data. The new rules have a 60-day comment period, which ends Aug. 11. ASCs and other groups may submit their own data and suggestions before HCFA's changes are made final. (For information on how to submit comments, see resource box, p. 50.)