Should ASCs be cited for non-list procedures?

Medicare changes coming down the pike

The Centers for Medicare & Medicaid Services (CMS) recently issued a memo directing Medicare certification surveyors to confirm that ambulatory surgery centers (ASCs) are not performing non-ASC list procedures on Medicare beneficiaries, but "we think CMS is totally incorrect," says Kathy Bryant, executive vice president of the Federated Ambulatory Surgery Association (FASA) in Alexandria, VA. Bryant updated ASCs on Medicare issues at the recent annual FASA meeting.

CMS was supposed to respond to the issue by May 5, but an answer had not been received at press time, according to Bryant.

A "step forward" comes from the March 2004 Report to Congress from the Medicare Payment Advisory Commission (MedPAC), she says. The report suggested CMS use a list of procedures that are excluded from being performed in ASCs rather than a list of included procedures. The excluded procedures should be based on clinical safety standards and should not include procedures that require an overnight stay, MedPAC says.

Despite a statutory mandate to update the ASC list biannually, CMS updated the list in 1995 and then not again until 2003, says Eric Zimmerman, JD, partner with McDermott, Will, & Emery in Washington, DC.

"Because of CMS’ neglect, hundreds of procedures that have been developed or improved in recent years that are now suitable for the ASC have been left off the list of approved procedures, thereby denying beneficiaries the option to choose the ASC setting for these procedures," says Zimmerman, who represents the American Association of Ambulatory Surgery Centers and the Outpatient Ophthalmic Surgery Society.

An exclusionary list would better enable the list of ASC-approved procedures to keep pace with technological advancement, he says.

In the meantime, ASCs are scheduled to receive changes to the list of ASC-approved procedures that will be effective in July 2005, Bryant says. The proposed rule will be published later this year, and Same-Day Surgery will provide coverage.

What is status of new payment system?

The new payment system for ASCs will not be implemented before Jan. 1, 2008, Bryant says. The Medicare drug prescription law requires implementation between Jan. 1, 2006, and Jan. 1, 2008.

The new system likely will be based on the hospital outpatient department (HOPD) payment system, Bryant says. The drug prescription law specifies that CMS can’t use the new system to cut costs.

"It must be budget-neutral," Bryant says.

The General Accounting Office (GAO) is studying a comparison of relative costs of HOPDs and ASCs to determine whether the ambulatory payment classification groups work for ASC procedures. By Jan. 1, 2005, GAO must report on the appropriateness of groups, the appropriateness of weights, and geographic adjustments, if any.

HOPD rates provide no consistency

If ASCs were paid the same rate as HOPDs under 2004 payments, most ASCs would receive higher payments, Bryant says. However, there’s no consistency when you look at how different specialties would be reimbursed if they received HOPD rates, she says. For example, considering the April 1, 2004, reduction in ASC rates:

  • dermatology would be paid 45.41% more under HOPD rates;
  • gastrointestinal, .57% more;
  • general surgery, 102.31% more;
  • obstetrics/gynecology, 124.24% more;
  • ophthalmology, 27.11% more;
  • orthopedics, 131.96% more;
  • otolaryngology, 107.50% more;
  • pain/neurology, 7.12% more;
  • pulmonary, 27.69% more;
  • urology, 44.94% more;
  • vascular, 149.39% more.

Of course, ASCs aren’t likely to receive 100% of the HOPD rate, Bryant says.

If ASCs are reimbursed under the HOPD system, one question to be resolved is whether the same formula will be used for geographic adjustments, Bryant says. This difference is important. In areas with the highest wage indexes, ASCs would receive approximately $180 more if paid based under the hospital geographic adjustment formula rather than the current one, Bryant says.

Another possible high note: If ASCs receive regular, higher updates, as hospitals currently do, ASCs will benefit, she says.

On another payment note, ASCs are not being paid for implants when they should be, Bryant says. These items are not part of the facility fee; however, ASCs may furnish and be paid under other parts of Medicare Part B for services that are not considered ASC facility services, she says. The usual Part B coverage and payment rules apply to such services, according to Bryant. To get paid, look at direction in the "CMS Program Memorandum to Carriers: Transmittal 127 — DME Prosthetics, Orthotics, and Supplies."

The transmittal tells whom to bill, as follows:

  • L8499 (if implanted) to the carrier;
  • L8600-L8699 to the carrier;
  • L0100-L2090 orthotics to the DME regional carrier.

[Editor’s note: To see the transmittal, go to Under "Medicare Claims Processing Manual (Pub. 100-04)," click on transmittal number "127."]