Providers want changes in new ambulatory rates

Current proposal would reduce some payments

If implemented next year as planned, Medicare will replace its current eight payment groups for ambulatory surgical centers (ASCs) with 105 categories based on the new Ambulatory Payment Classifications (APCs).

Unhappy with both the data used and the basic way in which rates would be calculated, physician and specialty groups are lobbying the Health Care Financing Administration to take this radical change in ASC payments back to the drawing board for more work.

"We have met with HCFA officials and let them know we feel delaying the final rule until our concerns are adequately addressed is reasonable and in everyone’s best interest," says Kathy Bryant, executive director of the Federated Ambulatory Surgery Association in Alexandria, VA.

Basic provider complaints about the current proposed rule include the following:

• Providers say the new rule illegally shifts costs of Medicare treatment to private providers and payers. Providers challenge HCFA’s claim that the proposed APC rates are budget-neutral as required by law. Paul Rohlf, MD, president of the American Association of Ambulatory Surgical Centers (AAASC) in Chicago, says the proposed payment rates would cut overall Medicare ASC outlays by closer to 10%.

Hardest hit would be single-specialty facilities specializing in ophthalmology, digestive G/I, and urology, which would probably see reductions in their Medicare reimbursement ranging from 15% to 25%, predicts Rohlf.

• Providers note that HCFA is legally required to use "actual costs" when setting payment rates for ASC codes. Yet HCFA’s own original June 12, 1998, Federal Register notice admitted it had to extrapolate a large number of fees because it lacked sufficient cost data for 42% of all ambulatory surgical codes.

• The AAASC says the new rates are biased towards lower payments. The organization says a study by the Lewin Group, a Fairfax, VA, consultancy, found that there is a 65% greater chance of a reduction in the proposed payment for codes with extrapolated APCs than in those for which HCFA had actual data available.