REGULATORY REVIEW
A question that ASCA staff get commonly is how does the Centers for Medicare & Medicaid Services (CMS) reimburse for devices?
The quick answer is that just as nurs- ing services and technical personnel ser- vices, surgical supplies and general over- head are all included in the facility fee, typically, so are implantable devices. If a device cost is significant enough, according to Medicare calculations, the full cost of the device will be baked into the facility fee for that procedure.
Prior to 2008, the ASC payment system was not tied to the hospital outpatient prospective payment system (OPPS) and ASCs received separate payment for implantable prosthetic devices under the Durable Medical Equipment, Pros- thetics/Orthotics, and Supplies (DME- POS) fee schedule. This changed, how- ever, when the revised payment system was implemented that year, since pay- ment for procedures is now based on the OPPS, which packages implantable devices in the payment for the surgical procedures that require their implanta- tion. The only time devices receive sep- arate payments under the OPPS and ASC payment systems is if they are specific, new technology items that are used in the delivery of services. Devices are considered for “pass-through” pay- ments in this situation to ensure benefi- ciaries have access to technologies that are too new to be represented in the cost data CMS uses to set OPPS rates. At least in theory, high-cost devices are fully contemplated in the payment rate for the facility fee. This means, whatever reimbursement the hospi- tal outpatient department (HOPD) receives for the device-related portion of a device-intensive procedure, the
ASC receives the same amount. CMS uses a modified payment methodology to establish ASC payment rates for pro- cedures that are designated as “device- intensive.” Using that methodology, CMS develops estimates of the “device offset percentage,” the proportion of the procedure’s costs that are attributable to the cost of the device when the proce- dure is performed in the HOPD setting. For example, if the OPPS pay- ment for a device-intensive procedure is $1,000 and the device offset is 75 percent, the device portion is $750. The remaining $250 is known as the service portion of the procedure and represents the non-device costs for the procedure. Under the revised ASC payment system, CMS pays the same $750 as under the OPPS but will adjust the service portion by the ASC conver- sion factor, just as it would any non- device intensive procedures. When the payment systems were aligned originally, if the device offset percentage for the entire ambulatory payment classification (APC) group to which the surgical code was assigned was greater than 50 percent of the APC’s median cost, the procedure was designated as device-intensive. In 2008,
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the first year of the revised payment system, there were 45 device-intensive codes in the ASC payment system.
Ever since the payment systems were aligned, the ASC community has advo- cated for a better mechanism for address- ing device costs in the ASC setting. If a procedure did not meet the device threshold, but still had significant device costs, often the reimbursement rate was inadequate to cover much more than the device itself. In 2012, ASCs on average, were receiving 56 percent of the HOPD reimbursement for the same code. So, if there were a code under OPPS that was $1,000 but the device costs were $499, since the code did not meet the device offset threshold, the ASC would receive only about $560 for that code in 2012. The device itself was covered, but not much else. For years, ASCA advocated for CMS to establish a device threshold at 50 per- cent of the “unadjusted” ASC payment rate (relative weight * conversion factor), instead of basing the threshold on the cost of the procedure when done in the HOPD setting. In 2012, 271 procedures would have qualified as device-intensive under this definition. For procedures that were on the ASC list prior to 2008 and transitioned to the fully-implemented rates (previously represented by an H8 payment indicator and, now, under the current payment system, a J8 pay- ment indicator; see chart on page 33), the volume of the device-intensive ser- vices ASCs provided declined in the early part of the transition when pay- ments arguably failed to cover the cost of the device and service portion. As the transition progressed, payment improved for device-intensive ser- vices that had previously been on the
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