Physician-owned ASCs come under scrutiny

MedPAC to recommend changes to ASC

The Medicare Payment Advisory Commission (MedPAC) will discuss reimbursement for physician-owned ambulatory surgery centers (ASCs) at its March 18-19 meeting.

"I’m disappointed that MedPAC is raising the issue of physician ownership of ASCs," says Eric Zimmerman, JD, partner with McDermott, Will & Emery in Washington, DC.

This issue has been long-settled in favor of physicians owning ASCs, he says. "ASCs have been found by numerous law enforcement and regulatory bodies to be distinct from other services, because there is no risk of abuse."

At MedPac’s January hearing, a commissioner asked whether physician investment in ASCs should be scrutinized, similar to the current examination of surgical hospitals. The Medicare Reform Act placed an 18-month moratorium on new physician-owned surgical hospitals. Other commissioners agreed that the ASC ownership issue should be examined.

In other developments, MedPAC will recommend that a new system be developed for ASC payments. It will suggest that ASC payments be linked to the hospital outpatient prospective system (OPPS). MedPAC will suggest that no ASC payment exceed a hospital payment, after accounting for differences in bundles of services. MedPAC also wants the Centers for Medicare & Medicaid Services (CMS) periodically to collect ASC procedure cost data to set the hospital outpatient conversion factor.

After revising the ASC payment system, Medicare should eliminate the current ASC procedure list system and replace it with a list of procedures specifically ineligible for payment due to clinical safety standards and the need for an overnight post-op stay, MedPAC will recommend. This action is supported by the American Association of Ambulatory Surgery Centers; however, the group prefers that the government modernize the ASC list before it revises the payment system.

The Federated Ambulatory Surgery Association (FASA) has recommended that the ASC list be eliminated and that ASCs be reimbursed for all procedures not on the "inpatient-only list" used for hospital outpatient departments.

"FASA is pleased that MedPAC’s recommendation takes a step in this direction, but it does not go far enough in that there would still be separate lists for ASCs and [hospital outpatient departments], says Kathy Bryant, executive director of FASA. "We are also disappointed that MedPAC recommends waiting until the new payment system is implemented, as this would mean the 2005 update would occur under the current rules."

MedPAC also will suggest eliminating the ASC update for fiscal year 2005.

"The recommendations are a bit of a mixed bag," Zimmerman says. The highlight is the recommendation to expand the ASC list, which is "long overdue and welcome," he says.

"The recommendation ultimately could persuade Congress and CMS to finally modernize the ASC list," Zimmerman says. "At the same time, the recommendation that ASC rates remain steady for 2005 is unjustified and moot given that Congress just enacted legislation holding rates steady next year." In addition, the recently passed Medicare Prescription Drug Bill freezes ASC rates through 2009.

For hospitals, MedPAC will recommend eliminating the current hospital outpatient outlier policy and providing full cost-of-living payment updates for hospital inpatient and outpatient services.