REGULATORY REVIEW


CMS Policies that Impact ASC Payments The ASC weight scalar exacerbates the difference in ASC and HOPD pay rates BY KARA NEWBURY


In the 2019 final payment rule for ASCs and hospi- tal outpatient departments (HOPD), the Centers for Medicare & Medicaid Ser-


vices (CMS) finalized its proposal to align the two entities’ update factors and moved ASCs to the hospital mar- ket basket, which has long been used to update HOPD payments. CMS plans to use the hospital market basket to update ASC payments for the five-year period of calendar year (CY) 2019 through CY 2023. CMS indicated in its 2019 and 2020 payment rules that it anticipates volume will shift to the ASC setting due to this policy change.


While the alignment of the ASC and HOPD update factors is a positive first step, it also shines a bright light on the true impact of another prob- lematic piece of ASC payment pol- icy: the ASC weight scalar. CMS will not see volume migrate from higher- cost HOPDs to the ASC setting with- out addressing this issue, and absent change, the ASC weight scalar will eventually threaten both Medicare beneficiaries’ access to outpatient sur- gical care in the ASC setting. ASCs accounted for 6.63 percent of the total spend between ASCs and HOPDs in 2016, but the ASC percent- age of that spend between the two set- tings has been declining ever since. According to CMS’ projections in the proposed payment rule, ASCs will account for only 5.83 percent of that spend in 2020. CMS will not see sig- nificant volume shift to the ASC set- ting until the ASC weight scalar issue is resolved.


Payment System Background Beginning January 1, 2008, CMS began paying ASCs for the facil- ity services they provide to Medi-


22 ASC FOCUS APRIL 2020 | ascfocus.org


REDUCTION DUE TO APPLICATION OF ASC SECONDARY WEIGHT SCALAR (CY 2009–CY 2020)


7.6% 4.3% 5.2%


2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2.5%


care beneficiaries using a system that is linked primarily to the HOPD pay- ment system, also known as the Hos- pital Outpatient Prospective Payment System (OPPS). Covered services include nursing, recovery care, anes- thetics, drugs and other supplies. The professional fees for physician ser- vices and anesthesia were kept sepa- rate and are paid under the physician fee schedule.


In 2008, when CMS implemented


its current ASC payment system, the agency’s stated goal was to encour- age high-quality, efficient care in the most appropriate outpatient setting and to align payment policies to eliminate payment incentives favoring one care setting over another. There is, how- ever, one significant policy that impacts ASCs but not HOPDs, the ASC weight scalar, that continues to incentivize pro- cedures being done in the higher-cost HOPD setting.


Impact of the ASC Weight Scalar The goal of Medicare payment sys- tems is to contain costs year after year as much as possible. The term CMS uses is “budget neutrality,” which means CMS payments for the new year should not increase net


government spending for these ser- vices beyond the inflation update that is applied.


Although the ASC payment system is aligned with the OPPS, as noted above, CMS seeks to achieve budget neutrality in silos. CMS first takes OPPS relative weights, which are based on the average cost of services in a payment group (a group of codes that are clinically similar and typically similar in cost) according to hospital outpatient cost data. To try to achieve budget neutrality, CMS projects how much volume will be done in the coming year based on previous volume data and then applies a weight scalar to the OPPS relative weights based on the agency’s projections. Next, CMS applies an ASC weight scalar to the ASC relative payment weights that are based off of OPPS— excluding office-based payment rates that are tied to the physician’s fee schedule—to maintain budget neu- trality within the ASC payment sys- tem. That manipulation of the ASC payment rates is often referred to as a secondary rescalar, because it is the second time the weights have been scaled before they show up in the ASC payment system. ASC volume is con- templated separately from OPPS vol-


6.8% 7.7% 7.8% 6.7% 14.5% 12.1% 10% 10.1%


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