Medicare’s proposed 2015 payment rule for ASCs contains a mix of good and bad news for surgery center owners and managers. On the plus side, the ASC payment proposal accommodates some important requests made by the ambulatory surgery center community, including the addition of 10 new spine procedures to the ASC list of payable procedures and more favorable terms for device-intensive procedures. On the negative side, the disparity in payments between hospital outpatient departments (HOPDs) and ASCs continues to grow under the proposal. Here’s a rundown of the important points you need to know.

Payment update. CMS is proposing an effective payment update of 1.2% for ASCs and an effective payment update of 2.1% for HOPDs. The disparity is due in large part to the different update factors used for each site of service. Facility fees for HOPDs are updated annually, based on the hospital market basket, which measures the in?-?ation of medical costs such as equipment, supplies and staffing. ASC facility fees, on the other hand, are updated based on the Consumer Price Index for all Urban Consumers (CPI-U), which measures the cost of consumer goods such as bread, milk and gasoline. The CPI-U is unrelated to changes in medical costs and is historically lower than the hospital market basket.

The result is that under the proposal, the rates paid to ASCs and HOPDs will continue the troubling trend of diverging in 2015. To see how wide the gap has grown, one need only go back about a decade. In 2003, Medicare paid hospitals only 16% more, on average, than it paid ASCs. Today, HOPDs receive 81% more than ASCs for the same services. If this proposal is finalized, in 2015, HOPDs would be paid 85% more than ASCs for the same procedures. There is no health or ?-?scal policy in place to justify this increasing inequity. The Ambulatory Surgery Center Association (ASCA) fears this increasing gap may discourage ASCs from participating in the Medicare program.

Additions to ASC payable list. On the positive side, CMS proposes to add 10 new spine procedures to the ASC list of payable procedures for 2015.

While these spine procedures have been done safely and effectively in the ASC setting for years, the large disparity in payments between HOPDs and ASCs may make it economically unfeasible for ASCs to perform these procedures on Medicare beneficiaries. In addition, there are still 349 codes that aren’t payable in ASCs but are payable when performed in HOPDs. ASCA will advocate movement to the ASC payable list, particularly for those codes being performed in high volumes in HOPDs.

Device-intensive policy change. CMS also makes a positive change to its device-intensive policy in the proposed rule, proposing to define ASC device-intensive procedures as those procedures that are assigned to any Ambulatory Payment Classification (APC) — not only an APC formerly designated device-dependent — with a device offset percentage greater than 40% based on the standard OPPS (Hospital Outpatient Prospective Payment System) APC rate-setting methodology. The previous threshold was 50%, and ASCA has advocated strongly for a lower threshold.

Medicare could realize substantial savings if the ASC payment were adequate to cover the cost of expensive implants and supplies. But more than 150 codes for procedures currently considered device-intensive are rarely performed in ASCs but are often performed in the HOPD setting (stent placement codes 37221 and 37226, for example). These procedures don’t qualify for device pass-through payments when performed in ASCs. Even though the cost of the device is greater than 50% of the cost of the procedure in the ASC setting, the device cost doesn’t meet the 50% threshold in the HOPD setting. ASCA recommends that CMS establish a threshold at 30% of the OPPS rate, which is equivalent to 50% of the ASC rate.

OPPS comprehensive APC policy. Although the OPPS is named such because it’s supposed to be a prospective payment system, it’s currently closer to a fee-for-service system, such as the one seen in the physician fee schedule. To make the OPPS more consistent with a prospective payment system, CMS adopted a Comprehensive-APC policy in the 2014 final payment rule but delayed implementation of this policy until 2015 to allow for more public comment. This policy would expand the categories of related items and services packaged into a single payment for a comprehensive primary service under the OPPS. In the OPPS rule, CMS created Comprehensive-APCs to prospectively provide a single payment for the entire hospital stay for high-cost, device-dependent services in 29 device-dependent APCs.

CMS is proposing “additional Comprehensive-APCs, including some lower cost, device-dependent APCs that were not proposed in 2014, and two new APCs for other procedures and technologies that are either largely device-dependent or represent single session services with multiple components.” CMS also proposes to restructure and consolidate some of the current device-dependent APCs with similar costs using 2013 claims data. After all of the restructuring, there are 28 Comprehensive-APCs proposed in the 2015 rule as compared to the 29 that were finalized last year. CMS is not proposing to use these Comprehensive-APCs for ASC payments, which means that certain procedures would still be separately payable in the ASC setting in 2015 but not the HOPD setting. It is unclear at this point the extent to which the Comprehensive-APC policy will impact ASCs, but it is something to monitor.

Expanded packaging of codes. CMS currently pays HOPDs and ASCs separately for services that are integral to a primary service. For 2015, CMS is proposing to conditionally package ancillary services assigned to APCs with a geometric mean cost of $100 or less (before applying the conditional packaging status indicator to the services within these APCs) as a criterion to establish an initial set of conditionally packaged ancillary service APCs. Conditional packaging means that if these ancillary services are furnished by themselves, CMS will continue to make separate payment for the service.

Quality reporting for ASCs. Agreeing that it would be a burden to report the measure, CMS is proposing to make ASC-11: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery a voluntary measure in the ASC Quality Reporting (ASCQR) Program. ASCA worked closely with several ophthalmic groups to advocate against its inclusion in the ASCQR Program. ASC-11 is a physician-level measure that is inappropriate as a facility measure because it doesn’t speak to the quality of the ASC. It would also force ASCs to provide data on a measure that they don’t routinely possess.

CMS is proposing to add a new quality measure, ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy, which will affect payment in 2017, with data collection beginning in 2015. This measure will be a claims-based measure that has also been proposed for addition in the HOPD quality reporting program.

Comments?
CMS is accepting comments on its proposed rule until Sept. 2. ASCA will be providing an online tool, sample language and talking points to make that process easy. You can submit your comments at www.ascassociation.org/2015ProposedRuleComments. CMS will respond to comments in a final rule scheduled to be released on or around Nov. 1.