CMS Revises ASC Payment System

(PYA Alert dated August 21, 2007)


On July 16, 2007, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule establishing the policies for the revised payment system for Ambulatory Surgical Centers (“ASCs”) beginning in 2008. Below is a brief summary of the final rule:

• CMS estimated 2008 ASC rates would be targeted at 67% of the corresponding hospital outpatient department (“HOPD”) rates for the same procedure. However, this rule only sets methodology and the exact percentage can only be determined when final 2008 HOPD rates are released.
• The final rule pays the ASC the same amount for implants/devices as the corresponding outpatient prospective payment system (“OPPS”) rate. The ASC conversion factor is applied to the remaining non-device portion of the payment.
• Geographic adjustments will continue to be made under the final rule using the most recent hospital wage index. The labor portion changes to 50% of the ASC payment as recommended in the November 2006 GAO Study on ASC costs.
• The revised payment system will transition over four years blending the old ASC rates and the new HOPD rates. New procedures added to the ASC payment system will not be subject to the transition but will be paid at 65% of the OPPS rate unless capped at the physician office rate. The table below displays the transition of payments.
  

  Year	% Based on 2007 Rate	% Based on Current Year
  2008	75%	25%
  2009	50%	50%
  2010	25%	75%
  2011	0%	100%

The conversion factor will be updated by the consumer price index for urban customers while OPPS will be updated by the hospital market basket.

There are 793 procedures to be added to the ASC payment system. CMS will pay for any surgical procedure that does not pose a significant safety risk to Medicare beneficiaries when performed in an ASC, and is not expected to require an overnight stay. Payments for procedures that have been performed predominantly in the office setting have been capped at the non-facility practice expense component of the Medicare’s Physician Fee Schedule. This will result in approximately 3,300 covered surgical procedures under the revised ASC payment system.

If you have any questions regarding the impact the Medicare ASC revised payment system will have on your ASC, please contact David McMillan at (800) 270-9629 for additional information.

Source: Centers for Medicare and Medicaid Services, American Association of Ambulatory Surgery Centers, and FASA

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