Hospitals may sue over Medicare cuts

Physician supervision of CRNAs, ASC codes

The Chicago-based American Hospital Association (AHA) has threatened to sue the Department of Health and Human Services because it claims the Centers for Medicare & Medicaid Services (CMS) failed to provide proper notice and a comment period on the proposed pro-rata reduction of pass-through payments and other changes under the Medicare outpatient prospective payment system (OPPS) for hospitals.

Without the necessary data, erroneous OPPS rates "will impose unacceptable burdens on hospitals in these already trying times," the letter says. AHA estimates the change could result in a potential shortfall of $1.5 billion in payments to hospitals

Some political leaders have said that the reimbursement cuts could be difficult potentially for rural, suburban, and small hospitals. However, despite the criticism, CMS says it plans to move ahead with the OPPS changes. The changes were published in the Nov. 2 Federal Register, which can be accessed at

Pass-through payments cover certain high-tech devices, drugs, and biologicals above the reimbursement provided through ambulatory patient classifications (APCs). Pass-through payments cannot exceed 2.5% of total hospital outpatient spending for 2002. CMS estimates pass-through pay- ments would be about 13% next year, which would have required an 80% reduction in pass-through payments. The rule "folds in" 75% of the costs of the pass-through devices to the base payment rates for APCs, according to a CMS release. For 2003, 100% of the pass-through payments are expected to be folded into the APC base payment rates. The rule also set newer, more rigid criteria for additional pass-through device categories aimed at reducing demand for such new categories.

An interim final rule, also published Nov. 2, explains how CMS plans to establish new device categories for pass-through payments for hospitals. CMS is taking comments on that interim final rule until Jan. 2. CMS issued a final rule in the Nov. 13 Federal Register that maintains physician supervision of certified registered nurse anesthetists (CRNAs). The rule can be accessed at

As proposed earlier, governors can seek exemptions for the CRNAs in their state as long as the exception is consistent with state law and they have consulted with the state medical and nursing boards. (For more on the proposed rule, see Same-Day Surgery, September 2001, "Proposed rule addresses supervision of CRNAs.")

Medicare also has added procedure to the ambulatory surgery center (ASC) list due to coding changes. The changes took effect Jan. 1, 2002. The deleted codes are: 26585, 26597, 29815, and 54510. The added codes are: 25024, 25025, 25275, 25671, 29805, 29806, 29807, 29824, 29900, 29901, 29902, 36819, 36820, 46020, 52001, 53431, 53444, 53445, 53446, 54162, 54163, 54164, and 54512. To access this list electronically, go to Search for "Update of Codes and Payments for Ambulatory Surgical Centers (ASCs)" issued 10/02/01. 

ASCs not likely to have APCs until at least 2004

According to the Alexandria, VA-based Federated Ambulatory Surgery Association (FASA), the outpatient prospective payment system for ambulatory surgery centers (ASCs) won’t be implemented in 2002. "Implementation in 2003 does not appear likely either," says FASA in a notice published on its web site ( Outpatient surgery organizations and officials from the Centers for Medicare & Medicaid Services are discussing other alternatives for ASC reimbursement, the association says; however, Medicare officials have not indicated whether APCs will be implemented later.