REGULATORY REVIEW


ASCA Takes Aim at Medicare Payment Policy Change sought in annual update, devices and definition of surgery BY KARA NEWBURY


From survey and certi- fication issues to qual- ity reporting and physi- cian payment issues, there is always something hap-


pening on the federal regulatory front. One of the primary areas of focus for ASCA regulatory staff is on Medicare payment policy issues, and advocacy efforts related to Medicare’s 2019 ASC payment rule are already underway.


Payment Policy


The rate-setting process CMS uses to determine ASC payments is sophisti- cated, and many policies included in that process have been causing a grow- ing disparity in payments between ASCs and hospital outpatient depart- ments (HOPD) over the past several years. ASCA has been and will con- tinue advocating for changes in those policies to turn the tide and encourage more outpatient surgery procedures to migrate to the lower-cost, high-quality ASC setting. ASCA’s regulatory advo- cacy for the 2019 payment rule began right after the 2018 rule was released in November. With the proposed pay- ment rule coming out in early July every year, it is imperative that ASCA staff meet with CMS staff early in the year to provide the information they need to make informed policy deci- sions. A few of the payment policy issues that ASCA is addressing this year are described below.


Medicare’s annual inflationary update


The Hospital Outpatient Prospective Payment System (OPPS) update is based on the Inpatient Hospital Mar- ket Basket (HMB), which comprises data that reflects the cost of items and services necessary to furnish an outpa-


24 ASC FOCUS APRIL 2018 |www.ascfocus.org


tient surgical procedure. The HMB has historically been higher than the Con- sumer Price Index for All Urban Con- sumers (CPI-U), the update factor used for ASCs. The CPI-U is an index that measures the average change over time in the price of consumer goods, which are “goods and services that people buy for day-to-day living.” It is not a suit- able inflation index to update ASC pay- ments because it does not accurately represent the costs borne by facilities to furnish surgical procedures. By using different update factors, CMS is continuing a disturbing trend of a growing disparity in payment rates between ASCs and HOPDs. In 2003, Medicare paid ASCs 86 percent of the amount paid to HOPDs; today, Medicare pays ASCs 50 percent of the amount paid to HOPDs. CMS acknowledges year after year in its OPPS/ASC payment rule that the CPI-U is not an appropriate update factor to be used for ASC payment increases.


It continues to do so,


however, in large part because moving ASCs to the HMB would be viewed as costing the Medicare system money, since migration of volume to the lower-


Track the Latest Regulatory and Legislative News for ASCs


Visit ASCA’s website every week to stay up to date on the latest government affairs news affecting the ASC industry. Every week, ASCA’s Government Affairs Update newsletter is posted online for ASCA members to read. The weekly newsletter tracks and analyzes the latest legislative and regulatory developments concerning ASCs.


www.ascassociation.org/ GovtAffairsUpdate


cost ASC setting cannot be guaranteed. ASCA has done an analysis and determined that less than 0.5 percent of volume would need to move from the HOPD setting to the ASC setting for this policy change to be budget neutral. We believe this is compelling information that should help our advocacy efforts move forward.


Device-intensive codes For most codes in the OPPS and ASC payment systems, the device costs associated with each code are not con- templated in the payment. However, once the device reaches the tipping point—40 percent of the total cost of the procedure when done in the HOPD setting—CMS contemplates the device cost in the payment rate. When that happens, CMS divides the pay- ment into a device portion and a non- device portion and pays the ASC the same amount it would under the OPPS for the device portion but the lower amount for the non-device portion of the service.


Since the non-device portion of


the payment is significantly lower for ASCs than HOPDs—around 50 per- cent currently—ASCA continues to argue that a lower device threshold is needed to ensure ASCs can perform cases that require significant device costs. ASCA was successful in get- ting the device offset dropped from 50 percent to 40 percent in previous rulemaking and will continue to advo- cate for a lower device offset thresh- old. We believe that if CMS contem- plated device costs of 30 percent in the HOPD setting in payment rates, it would be economically feasible for ASCs to perform more procedures that have high device costs but do not meet the current threshold.


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