Ambulatory surgery centers stand to see some major changes in how they're reimbursed by Medicare over the next year or two. This isn't just good news; it's potentially great news.

75 percent of the HOPD rate
ASC reimbursement rates will likely be linked to Medicare's generally higher hospital outpatient department rates by 2008, the deadline CMS has to develop a new payment system for ASCs, as mandated by the Medicare Modernization Act of 2003. A Congressional bill (HR 4042, the Ambulatory Surgical Center Payment Modernization Act) would require CMS to pay ASCs 75 percent of the HOPD rate, as well as reform the mechanism that CMS uses to determine what procedures Medicare reimburses ASCs for providing.

In essence, the bill would let ASCs perform and receive facility payment for all outpatient surgical services, except those procedures that require an overnight stay or pose a substantial risk to patient safety. ASCs might also receive the same annual updates paid to hospitals and enjoy other additional payments made to hospitals, including those for outliers, implants and medical devices.

In most cases, ASCs will be paid more under the new payment system. For example:

• The HOPD rate for CPT 66984 (cataract surgery with IOL) is $1,329.48, more than $350 higher than the current ASC rate of $973.
• The HOPD rate for CPT 29826 (shoulder arthroscopy/surgery) is $2,483, nearly $2,000 higher than the current ASC rate of $510.

Keep in mind that there likely will be a transition period to any new payment rule.

An exclusionary list
Importantly, under this draft bill, by 2007 CMS would develop a list of those procedures that ASCs would not be paid for rather than the current process of determining for which procedures ASCs will be paid. In addition, the existing guidelines for determining which procedures will be reimbursed would be replaced by two criteria: whether a procedure is safe to perform in an ASC and without an overnight stay. If either can't be met, Medicare wouldn't pay ASCs for performing the procedure.

Analysts say linking the ASC and HOPD payment systems would simplify the administrative process CMS uses to update ASC procedure groups and relative weights. They also say that aligning the ASC and HOPD payment systems could minimize financial incentives to shift services between settings.

How you're paid today
Compare what will be to what is. Medicare pays you a facility fee for nearly 2,500 procedures classified into one of nine payment groups. Payment for a procedure provided in an ASC is governed by a list, commonly referred to as the ASC list, constructed by CMS, and Medicare won't reimburse any ASC for performing any procedure not on this list.

The ASC fee schedule is a prospective payment rate, which means it is set in advance and is not based on actual charges or what it costs a particular ASC to provide the service. The government hasn't rebased these facility fees in 15 years. For a procedure to be included on the list, the procedure must meet certain criteria. Some of the major criteria include that the procedure

• require less than 90 minutes of operating room time,
• require four hours or less of recovery time,
• does not generally result in extensive blood loss,
• does not require major or prolonged invasion of a body cavity,
• does not directly involve major blood vessels and
• not be generally life threatening or emergent in nature.

Medicare reimburses ASC procedures that are on the list according to nine groups. Most of these nine groups contain many codes from various specialties that are supposedly resource and cost homogenous. The payment rates range from $333 for Group 1 services to $1,339 for Group 9 services and are weighted for the labor portion of the payment by the geographical wage index. (To determine your Medicare fee schedule, use the calculator at writeOutLink("www.fasa.org/reimbursement.html#med2",1)).

This payment rate includes basically everything in the ASC except physician fees and external services, such as lab and pathology. For instance, the facility fee covers overhead expenses, nursing services and all materials related to patient care, including surgical supplies, drugs, biologicals and anesthesia materials. In some cases, implants are separately billable to Part B Medicare; you can find a list of them at writeOutLink("www.fasa.org/2004DME-List.pdf",1).

ASCs bill on the CMS 1500 form with CPT codes, using modifiers as appropriate and ICD-9 diagnosis codes. Procedure rules also allow for multiple-procedure billing and billing for terminated procedures if the specifics of the case fit criteria defined in the appropriate modifier. There are also certain criteria that patients must meet in some cases, called medically necessary criteria, that ASCs should be aware of. ASCs' claims are subject to these guidelines, just as physicians' claims are.