On July 1, when the updated list of ASC-approved procedures takes effect, your physicians will need to understand which procedures they can and can't perform in your surgery center. We'll help you do just that, highlighting the 288 additions, 141 deletions and other noteworthy changes to the Centers for Medicare & Medicaid Services' (CMS) long-awaited and much-anticipated list of reimbursable procedures. As you might expect, the news is mixed, giving facility managers as many reasons to celebrate as causes for concern.

When you examine the 288 additions, you'll discover:

• many common arthroscopy, urology and eye procedures;
• that 48 of the added codes are at the 9th and highest Medicare payment group for ASCs, which is $1,339, subject to regional adjustments;
• and that 71 codes that were proposed for deletion were kept in the final rule, including three urodynamics procedures and four nerve block codes.

Now the not-so-good news. By and large, the 141 codes that were eliminated from the list are for low-volume and lower-reimbursed procedures that can be done in a doctor's office (see "9 Highest-Volume Deletions" on page 42). But 191 fairly common ASC procedures that were proposed for addition didn't make the final cut, forcing Medicare beneficiaries to have those procedures done in hospital outpatient departments. Examples include laparoscopic cholecystectomy and diagnostic sigmoidoscopy.

"For a single-specialty facility that relies on a specific code, the deletions might hurt," says American Association of Ambulatory Surgery Centers (AAASC) lobbyist Mike Romansky. "But for multi-specialty facilities, this [update] is not a make-or-break type thing."

Read on for a rundown of what you can and can't do, plus what to be aware of in addition to the changes themselves.

What you can now do
"From a pure volume standpoint," says Lolita Jones, RHIA, CCS, "a great number of cases are being added."

Many of the additions are common outpatient procedures, meaning expanded flexibility and procedure volume for ASCs. Others create the possibility of separate payments for implants and some include 150 percent payment for bilateral surgery.

Noteworthy additions include four dermatology procedures, 15 musculoskeletal procedures, three respiratory/ ENT procedures, 15 urology procedures and three ophthalmology procedures. "They're already doing these procedures for the non-Medicare population with enough volume that they get patients referred to them for Medicare," says AAASC Executive Director Craig Jeffries.

Gary Gruen, MD, professor and vice chairman of the department of orthopedic surgery at the University of Pittsburgh, calls the addition of 11 arthroscopy codes a big step forward for orthopedics. Three of the 11 codes - 29848 (wrist arthroscopy with release of transverse carpal ligament), 29862 (hip arthroscopy) and 29893 (scope, plantar fasciotomy) - will be reimbursed at the new Group 9 payment rate.

"Those [codes] are invaluable to an orthopedic practice," says Dr. Gruen. "Ankle arthroscopy and hip arthroscopy historically have been done as open procedures. Knee arthroscopy has been done for 20 years ' but more can be done in an ASC."

Of the more than 70 added urology codes, five cover reconstruction of the urethra, a common procedure that will be reimbursed at the $510 Group 3 rate, and a dozen are Group 9s. Other notable additions:

• 58545 (Laparoscopic myomectomy),
• 58546 (Laparo-myomectomy, complex) and
• 58550 (Laparo-asst vaginal hysterectomy).

Most of the 17 GI procedures added to the 9th payment group are hernia surgeries, including 49501 (repair initial inguinal hernia incarcerated or strangulated) See "13 Most Important Group 9 Codes" on page 44.

Although ophthalmology will not realize many additions when the new list takes effect July 1, according to AAASC, the additions of 65772 and 65775 (correction of astigmatism) and 66825 (repositioning of intraocular lens) were significant. Rene Coady, a coding and billing expert for Plymouth Laser and Surgical Center in Plymouth, Mass., was surprised by another addition: 67335 (eye suture during surgery). "We've never been paid for sutures before," she says. "That's a really good thing. It's usually never billed separately."

71 get new life
Most of the 71 codes that were proposed for deletion but remained part of the ASC procedure list in the final rule fell into one of three categories: orthopedics, pain management or urology (see "14 Highest-Volume Retainees" on page 40).

Four of the five highest-volume retainees belonged to pain management. The four "injection for nerve block" codes - 64510, 64520, 64421 and 64420 - were supplemented by 64622 (injection treatment of nerve), and 64415 and 64417 (injection for nerve block).

"I think pain management was surprised," says AAASC Executive Director Craig Jeffries, noting that pain management kept 18 procedures in all. "Procedures likely to have been deleted weren't. But that's false relief rather than gain."

Two muscle-transfer codes (23395 and 23397), several codes pertaining to the radius and ulna (25390, 25391, 25392, 25393, 25405 and 25420) and finger abscess drainage (26011) are among the 15 orthopedics codes that will be retained. "Those procedures are all quite common," says Dr. Gruen. "It would have been deleterious [for CMS] to delete those procedures."

Urology retained three urodynamics procedures - 51726 (complex cystometrogram), 51722 (urethra pressure profile) and 51785 (anal/urinary muscle study) - among its roughly 20 retained codes.

What you can't do
CMS left off the final rule 191 codes it had proposed for addition to the list. Among the common procedures CMS will reimburse only if they're done at a hospital outpatient department are laparoscopic cholecystectomy and diagnostic sigmoidoscopy (see "22 Codes You Wish Were Added But Weren't").

CMS cited several reasons for not taking action on these codes, according to Ms. Jones.

• Some of the proposed procedures are inconsistent with criteria for determining surgical procedures payable to an ASC, set out in section 416.65 of the Code of Federal Regulations. Codes 56340, 56341 and 56342 (laparoscopic cholecystectomy with and without cholangiography and common duct exploration) and 56348 (laparoscopic assisted vaginal hysterectomy) are all, according to CMS' final rule, "appropriately performed in an ASC for many non-Medicare beneficiaries in the 65-and-under age group. However, these procedures often involve an overnight stay for Medicare beneficiaries and ' do not conform to our standard."
• Some of the proposals, though they meet the criteria for inclusion, would be significantly overpaid, even in the lowest ASC payment group, which CMS fears would precipitate a shift of these procedures to the ASC setting. These include 62292 (injection into disk lesion), 65855 (laser surgery of eye) and 65820 (relieve inner eye pressure).
• Some of the proposed additions were deleted from the CPT codebook post-1998. Code 62298 (injection into spinal cord) is an example.
• Public comment convinced CMS to exclude some of the proposed procedures. Several medical associations took advantage of the extended comment period to keep many procedures, including the following, off the list:
  - 57284 (repair paravaginal defect)
  - 57288 (repair bladder defect)
  - 57460 (cervix excision)
  - 42842 (extensive surgery of throat)
  - 58345 (reopen fallopian tube)
• Procedures done more than 50 percent of the time in a physician's office were excluded. Examples of these, according to Debbie Hay, RN, BSN, CASC, the administrator at North Dallas Ambulatory Surgery Center, include:
  - 17106 (destruction of skin lesions)
  - 12001 (repair superficial wound[s])
  - 26770 (treat finger dislocation)
  - 28108 (removal of toe lesions)
  - 51705 (change bladder tube)

Ophthalmology was particularly hard hit by CMS' not adding procedures.

"We're disappointed they didn't approve a number of laser procedures," says E. Michelle Vickery, executive vice president of NovaMed. "Trabeculoplasty, iridotomy, prophylaxis for retinal detachment ... those are all procedures they did not approve because of payment methodology for ASCs. We got very few of the total number of codes we were hoping for approved."

"The [laser iridotomy] and the trabeculoplasty are huge," says Ms. Coady. "If you have a glaucoma specialist, it's definitely high volume. Treatment for glaucoma doesn't end; it's ongoing ' Patients sometimes have to have that procedure done several times. It would have been really great ' to be able to recoup some of that money."

141 codes get the axe
Most of the deletions were eliminated from the ASC list for one of two reasons:

• CMS found a procedure to be medically inappropriate for Medicare patients in the ASC setting. This includes 15842 (flap for face nerve palsy), 26035 (decompress fingers/ hand), and 60220 and 60225 (partial removal of thyroid).
• A procedure is so frequently performed in physicians' offices that CMS deemed ASC reimbursement inappropriate. Code 51005 (drainage of bladder) was axed for this reason.

"I don't think any of the deletions are horrendous," says Mr. Romansky. Only nine of the deleted codes were performed more than 100 times in 2001, and of those, only one's case volume (analyze spine infusion pump) was in the thousands. In addition, 51 of the deletions were not billed at all by an ASC to Medicare in 2001, according to FASA.

What to be aware of
Many state Medicaid programs, private insurers and state workers' compensation programs base their reimbursements on the ASC-approved CPT list.

"A lot of our managed-care contracts are tied to Medicare groupers," says Ms. Hay. "If they're not Medicare-approved, we have negotiated payments for them. By [CMS] putting them into groupers, it's effectively decreased reimbursement for managed care. It's like [the insurance companies] found a way to reduce our payments without renegotiating."

Some surgery centers could actually lose money, despite the ability to do significantly more procedures.

"Part of how good the list update is for a specialty remains to be seen based upon this private reimbursement issue," says Kathy Bryant, the executive director of FASA.

According to Ms. Jones, most private payers will follow CMS' lead with the additions and, depending on a payer's rules, most will probably still pay for the deletions, but at discounted rates. Codes added to the Group 9 payment rate may cause some sticky situations.

"[The insurance companies] will be very sensitive to codes in payment Group 9," says Ms. Jones. "What will be the payment rate with non-Medicare payers? Now, they're going to have to come up with a ninth rate, too."

Contact all of the third-party payers that contribute to 80 percent of your ASC's revenues to determine whether they will change their fee schedules based on Medicare's ASC List changes, says Ms. Jones. For example, any changes to the ASC List are likely to impact these payers that reimburse ASCs a set rate based on a procedure's presence on the Medicare ASC List, Find out if there are any changes with these payers, and the effective for the changes, since Medicare's July 1, 2003, effective date may not be the date that other payers will enact their payment policy changes.

If private insurance payments are going to come up short, especially with new, higher-cost procedures that involve implants or devices, start looking into supplemental payments. You can estimate beforehand the financial impact of the rate changes.

"If [ASCs] are already performing those procedures on non-Medicare patients, they may have a handle on supplies, costs, staffing needs, frequency and case times," says Ms. Jones. "They can quickly asses what it's going to mean on a Medicare patient. But they need to be busy between now and July, costing out procedures. Then they have to base their budgets on those figures; it could be good or bad."

The time element
A big problem with the updated ASC procedure list is that it's already eight years old.

"[CMS] narrowed themselves to that list from 1998, which means they started thinking about [the codes] in 1996, which means these procedures started being performed in the early 1990s," says Mr. Romansky. "Which means they're not ahead of the curve."

The payment groupings for the procedures are even older. That $1,339 reimbursement for the new Group 9 procedures is based on figures from 1991 - when that designation was first created. For the most part, ASC rates as a whole have been updated for inflation nearly every year since 1986; but the fee schedule hasn't been overhauled since then. This fact kept many procedures from being added.

"CMS did not include a lot of procedures - some laser procedures and low-intensity procedures - because it would have meant paying them at the Group 1 rate," says Romansky. "Because those procedures would be paid less than that on the hospital side, CMS looks at it as unjustly enriching ASCs."

This process could take several years, though, meaning the absence of rate rebasing or an interim payment scale could prevent low-reimbursement procedures from making future ASC-approved CPT lists. The next list update would occur, theoretically, in 2005.

In addition, CMS didn't update the criteria for determining surgical procedures payable to an ASC, which it had proposed to do in 1998.

"That limits the ability to make the list," says Mr. Jeffries.

It is expected that CMS would revise the criteria for the next round of updates.

"What would be ideal," says Mr. Jeffries, "is that CMS will go to Congress with us and say, 'Here's a modern payment program for ASCs that includes rebasing and an expanded procedure list.' That would do what (director of CMS) Tom Scully says he wants to accomplish, and that's putting decision making back with the patient."