MedPAC letter calls for ASC cost reporting

In September, the Medicare Payment Advisory Commission (MedPAC) responded to the proposed ambulatory surgery center (ASC) payment rule by calling for cost reporting for all ASCs, according to the ASC Association (ASCA).1

MedPAC includes no one representing an ASC and is dominated by hospital-affiliated commissioners, the ASCA pointed out.

In its letter to the Centers for Medicare and Medicaid Services (CMS), MedPAC noted that it agrees with CMS that the Consumer Price Index — For All Urban Consumers (CPI-U) is an inappropriate update factor for ASC payments and might not reflect ASCs' cost structure. However, the MedPAC letter went on to state: "CMS should collect new cost data and use that information to examine whether an existing input price index is an appropriate proxy for the costs of these facilities or an ASC-specific market basket should be developed."

The letter did note that as the Medicare system moves toward global payments, the need for cost data might diminish. The association said, "ASCA continues to oppose cost reporting based on concerns regarding the additional burden it would place on ASCs and because of the unreliability of the data that has been collected previously."1

In addition, because ASC payment rates are based on the relative costliness of procedures performed in HOPDs, ASCA noted in comments to the proposed ASC payment rule that "[t]he delta between the ASC and HOPD [hospital outpatient department] conversion factor should be consistent from year-to-year, meaning that both systems are updated using a single inflation factor. An ASC-specific market basket moves no closer to the full alignment of the parallel payment systems than any other factor EXCEPT application of the update applied to the OPPS (hospital market basket)."

MedPAC: Practice doesn't make perfect

As part of its letter to CMS, MedPAC commented on the appropriateness of the ASC Quality Reporting Program measure of facility volume for six broad categories of procedures.

"Because the evidence of a link between facility volume and outcomes is primarily based on high-risk procedures rather than the low-risk procedures commonly performed in ASCs, we do not believe that the volume of ASC procedures is a good proxy for ASC quality," MedPAC said. "Moreover, adoption of this measure could lead ASCs to increase their volume to improve their performance on this measure, even though a link between the volume of outpatient surgery procedures and outcomes has not been demonstrated."

MedPAC also expressed concerns about the potential effect of ASC growth on overall Medicare spending. "Taken together, these two 'concerns' fly in the face of recent research and trends in Medicare spending," the ASCA said.1

The ASCA letter to CMS noted that in 2011, "total spending dropped for eight of the 10 most commonly performed ASC procedures, for a total reduction of $72 million for those eight procedures." In addition, payments to ASCs increased only by 3%, the lowest increase from the previous year since 1997, when MedPAC began tracking the data, the ASCA said. "Finally, previous studies have shown that more than 70% of ASC volume is a result of the migration of services out of the more expensive HOPD setting' thereby any increase in volume within the ASC setting would lead to greater savings for the Medicare program, its beneficiaries, and taxpayers," the association said.

Other recommendations and observations that the MedPAC letter puts forth include:

  • supporting a CMS proposal to implement a "composite APC" rate for low-dose rate (LDR) prostate brachytherapy, which is now paid separately in ASCs as CPT codes 55875 and 77778, but paid as a single rate when provided in the hospital outpatient prospective payment system;
  • reiterating its March 2012 recommendation to set the ASC payment update at 0.5% rather than the 1.3% recommended in the proposed payment rule;
  • concluding that ASC payments have been "at least adequate" in recent years;
  • calling for CMS to develop and release its plans for making ASC quality reporting data public;
  • recommending that the Department of Health and Human Services (HHS) adopt a value-based purchasing program for ASCs with incentive payments derived from existing Medicare spending for ASC services;
  • suggesting that measures related to surgical site infections, later hospital admissions, and the patient experience be included in the ASC quality reporting program.


  1. Ambulatory Surgery Center Association. MedPAC calls for cost reporting for ASCs. Gov Affairs Update Sept. 6, 2012; 2(34).