Medicare Update
MedPAC Proposal Likely Won't Make Medicare Bill
The final Medicare reform bill in Congress won't likely incorporate the Medicare Payment Advisory Commission's (MedPAC) recommendation to cap ambulatory surgery center payments. Neither the House nor the Senate versions of the bill include the recommended provisions that would have reduced as many as 358 ASC payments to the hospital outpatient department (HOPD) rate for the same procedure. The news for ASCs is not all good.

MedPAC's suggested reimbursement freeze remains on the table, and Congress may introduce it in future legislation, says Eric Zimmerman, Esq. The provision also could wind up in the present legislation.

Secondly, the House version of the Medicare bill (section 625 of HR1) includes MedPAC's recommendation to reduce the annual inflation update for ASCs by 2 percent below the Consumer Price Index (CPI), restoring a provision of the 1996 Balanced Budget Amend-ment that was allowed to lapse last year. The House bill calls for no decrease in HOPD adjustments and a 0.4 percent decrease in inpatient services. The Senate version does not address ASC cost-of-living adjustments and would let ASCs keep their full annual inflationary adjustment.

Meanwhile, the Senate bill includes an amendment introduced by Sen. John Breaux (D-LA) that would ban physician-owned specialty hospitals. The House version calls for a MedPAC study of specialty hospitals before any law is proposed. Sen. Breaux is among the conferees who will resolve the discrepancies in the bills (see "Bracing for a Medicare Clampdown on Specialty Hospitals" on page 22).

Resolution of the bill is not expected until mid-October.

HIPAA Compliance
How Will CMS Enforce HIPAA Coding Compliance?
The Centers for Medicare and Medicaid Services (CMS) will use a complaint-driven process to enforce new standards for coding and billing transactions set forth in the Health Insurance Portability and Accountability Act (HIPAA). The standards take effect Oct. 16.

If CMS gets a complaint about non-compliant coding, it will notify your facility in writing. To avoid punitive action, you must demonstrate a good-faith effort at compliance and submit a corrective action plan. In "good-faith" cases, CMS will not assess monetary penalties if there is reasonable cause for non-compliance, the non-compliance is not due to willful neglect of the HIPAA statute and if the problem is rectified within 30 days.

For more information on the HIPAA coding and billing standards, see "When Will Your Transactions Be HIPAA-Compliant?" on page 24. Visit www.cms.hhs.gov/hipaa/hipaa2/guidance-final.pdf for more information from the CMS website.

Refractive IOLs
Staar ICL on FDA Fast Track
Staar Surgical's Implantable Contact Lens (ICL) was accepted last month for substantive review by the FDA and granted expedited review status; the ICL is now one step from being used to treat myopia in the United States. The FDA grants expedited review when a device "represents a breakthrough in technology."

"The Staar ICL treats my-opic eyes in the range beyond what LASIK can treat, namely 10 diopters up to 20 diopters of near-sightedness," says Charles Post Jr., MD, of Plymouth Laser and Surgical Center in Massachusetts. "And it'll be available in lower powers, down to 1 or 2 diopters."

"[Surgeons] already doing temporal clear corneal surgery will find this to be an easy transition. It provides immediate good vision without invading the cornea or visual axis.," says Dr. Post, who learned to implant the Staar ICL in the Dominican Republic at a clinic run by Juan Batlle, MD.

This ICL Pre-Market Ap-proval Application (PMA) is for myopia; the phakic refractive lens also treats hyperopia and astigmatism. PMAs for those conditions are pending.

Financial Benchmarking
ASC Survey Reveals Profitability
Key findings from "Ambulatory Surgery Center Performance Survey," a benchmarking report based on 72 ASCs who responded to a Medical Group Management Association (MGMA) survey:

• ASCs with three or four ORs and service to surgeons in multiple specialties have economic advantages over smaller, single-specialty ASCs. Because they have higher volumes and a varied caseload, they can negotiate better rates.
• Profit per case dipped 14 percent in ASCs performing fewer than 2,000 cases per year, from $301 in 2000 to $258 in 2001. The 2,000-to-2,999-cases and 3,000-to-4,999-cases classes saw similar declines. Only the 5,000-or-more-cases category showed higher profits, up 7 percent from $202 per case in 2000 to $216 in 2001.
• The median income from operations as a percentage of medical revenue ranged from 27 percent to 31 percent.
• Median case volume for single-specialty ASCs in 1999 was 2,000; that figure jumped 15 percent to 2,300 in 2001.

Outpatient Surgery 2020
Study: Surgical Demand Growing, Surgeon Availability Shrinking
The demand for surgery will grow by nearly 50 percent in some specialties by the year 2020, according to a study in the August Annals of Surgery by UCLA researchers. They cite the aging U.S. population and improvements in minimally invasive surgical technologies as the reasons.

The study predicts double-digit volume increases for all specialties. But the surgeon availability is waning.

The biggest demand increases are predicted in ophthalmology (47 percent), urology (35 percent), general surgery (31 percent), orthopedics (28 percent) and neurosurgery (28 percent). The smallest is in ENT surgery (14 percent).

HealthSouth
Silver Linings Possible in a Bankruptcy
Amid the chaos surrounding HealthSouth, there have been some silver linings for physician partners in HealthSouth's 203 outpatient facilities.

"The management of HealthSouth has actually been much more conducive to working with the doctors and being less centralized and authoritarian," says Randall Dryer, MD, the medical director at the HealthSouth Surgic-al Hospital of Austin in Texas.

HealthSouth could be pushed into bankruptcy, despite its reorganization plan, because of an expanded federal investigation. Its options include selling the less-profitable facilities or turning over assets to creditors.

Regardless of who is selling interests in ASCs, physicians are likely purchase candidates, says Gary W. Marsh, Esq., a partner at the Atlanta branch of McKenna, Long and Aldridge. "The interests are sold at fair market value, which is decided by the courts," says Mr. Marsh, who specializes in Chapter 11 bankruptcies. "But the value may be far less than it was when HealthSouth purchased it because of the scandal, the economy and changes in the market."

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• After 11 years, the FDA may lift the ban on silicone gel breast implants, according to published reports...
• The first intracorporeal shock wave laser, the FREDDY (FREquency Doubled Dual-pulse, Nd:YAG) laser, is a portable lithotripsy unit that doesn't perforate or coagulate tissue, according to World of Medicine. A thin optical laser fiber put in an endoscope's working channel transfers short laser pulses to the kidney or bile duct stone, generating almost no thermal stress to tissue (unlike holmium laser treatments), but fragmenting the stone. The company says non-targeted tissue inadvertently exposed to the laser pulses is not harmed, resulting in less trauma and faster procedures...
• JCAHO's 2004 National Patient Safety Goals now include the reduction of nosocomial infection risks...
• CMS won't collect Medicare overpayments from January and February because doing so would overtax computers and take a year to complete. Underpayments will be rectified. Wrong payments were made because the 2003 conversion rate was not enacted until March...
• Surgical wound infection rates among smokers who abstained from smoking for four weeks before surgery were significantly lower than those for continuous smokers, according to a study published in the Annals of Surgery...
• Download the American Society of Gastrointestinal Endoscopy's (ASGE) new guidelines for flexible endoscope cleaning and disinfection at www.asge.org/gui/resources/manual/gea_inf_cont.asp.