Medicare’s 2016 Final Payment Rule A detailed analysis BY KARA NEWBURY

The Centers for Medi- care & Medicaid Services (CMS) issued its final pay- ment rule regulating 2016 ASC Medicare payments in

late October last year. Provisions in that rule went into effect January 1, 2016. Overall, ASCA was disappointed in the 2016 payment rates, mostly because CMS continued to inappro- priately use the Consumer Price Index for All Urban Consumers (CPI-U) to update ASC payment rates. ASCA, however, was happy to see that CMS added the 11 codes to the ASC-pay- able list that had been proposed for addition, and even added six more than proposed. On the quality reporting front, CMS did not make significant changes to the ASC Quality Reporting Program this year.

CPI-U Versus Hospital Market Basket CMS finalized an effective payment update of 0.3 percent for ASCs. This increase is based on a projected rate of inflation of 0.8 percent minus a 0.5 percentage point productivity adjust- ment required by the Affordable Care Act. This payment update is signif- icantly lower

than the 1.1 percent

update in the proposed rule, which was based on an inflation rate of 1.7 per- cent minus a 0.6 percentage point pro- ductivity adjustment. According to the rule, hospital out- patient departments (HOPDs) will receive a -0.3 percent increase. The negative update incorporates a 2.0 per- cent reduction to the conversion factor to try to correct what CMS perceived to be overpayments under the Hospital Outpatient Prospective Payment Sys- tem (OPPS) for laboratory tests that were excepted from the final calendar year (CY) 2014 laboratory packaging policy. Without the one-time reduc-


divergence in payment rates. CMS responded that it continues to believe that the hospital market basket is not reflective of the cost structure of ASCs. Two particular areas of expenses that the agency cited in this justification are room and board and emergency ser- vices.

CMS noted that it was using CPI-U as a ‘reasonable approximation of price increases’ since it has no cost data from ASCs.”

—Kara Newbury, ASCA

tion, HOPDs would have received a 1.7 percent update based on a 2.4 per- cent market basket minus a 0.5 percent adjustment for economy-wide pro- ductivity and a 0.2 percentage point adjustment required by statute. The disparity in updates is due in

large part to the different update fac- tors used for each site of service. Facility fees for HOPDs are updated annually based on the hospital market basket, which measures the inflation of medical costs such as equipment, sup- plies and staffing. ASC facility fees are updated based on the CPI-U, which measures the cost of consumer goods such as bread, milk and gasoline and is historically lower than the hospital market basket. As in previous years, in formal comments submitted to CMS follow- ing release of the proposed rule last year, ASCA requested that CMS use the hospital market basket to update ASCs. This would align the two update factors and prevent the continuing

CMS noted that it was using CPI-U as a “reasonable approximation of price increases” since it has no cost data from ASCs. CMS discussed continuing to assess the feasibility of collecting data but noted that collection of cost data through surveys would be “productive.” As a reminder, the rates that CMS released do not take into consideration sequestration, a 2 percent cut in Medi- care provider payments imposed in the Budget Control Act signed into law in August 2011. Sequestration reduces only the portion Medicare pays provid- ers by 2 percent; the patient responsi- bility is not impacted by sequestration.

Procedure List

CMS finalized the addition of the fol- lowing 17 codes to the ASC list of payable procedures for 2016, deter- mining that these procedures are safe and effective when performed in the ASC setting: ■

0171T (Lumbar spine proces distrac) ■

0172T (0172T (Lumbar spine pro- cess add)

■ 37241 (Vasc embolize/occlude venous) ■ 37242 (Vasc embolize/occlude artery) ■ 37243 (Vasc embolize/occlude organ) ■ 49406 (Image cath fluid peri/retro) ■ 57120 (Closure of vagina)

■ 57310 (Repair urethrovaginal lesion) ■ 58260 (Vaginal hysterectomy) ■ 58262 (Vag hyst including t/o) ■ 58543 (Lsh uterus above 250) ■ 58544 (Lsh uterus above 250) ■ 58553 (Laparo-vag hyst complex) ■ 58554 (Laparo-vag hyst w/t/o compl)

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