ASC Adviser

Good News for ASCs: Fees Will Increase for Ophthalmic Services

By Michael A. Romansky, J.D.

On July 16, CMS issued its long-awaited final regulation establishing a new payment system for ambulatory surgery centers (ASCs) as well as a proposed rule governing CY 2008 hospital outpatient department (HOPD) payments. These regulations will govern payment for ASC services commencing Jan. 1, 2008. For the most part, the new ASC payment regulation comports with the broad recommendations the Outpatient Ophthalmic Surgery Society (OOSS) has proffered to CMS since 2000. In some particulars, the rule falls short and may require further legislative and regulatory action on the part of OOSS and the ASC community.

In general, we have made significant progress, particularly when this regulation is compared with CMS' last effort to revamp the ASC payment system — the 1998 rulemaking that would have resulted in 10% to 20% reductions in facility payments for cataract and other ophthalmic services:

► The ASC procedures list has been eliminated. All services furnished in an HOPD can now be performed in an ASC except those that are excluded for reasons related to patient health and safety. Virtually every ophthalmic surgical procedure can now be performed and paid for in the ASC.

► ASC rates will now be linked to HOPD payments that, with respect to cataract and other ophthalmic services, have increased each year since the advent of the hospital outpatient prospective payment system in 2000.

► Under the final rule, starting in 2008, the first year of the new ASC system, the cataract facility fee will increase by $8 and vitreoretinal services will increase by hundreds of dollars per case.

► Commencing in 2010, ASCs will receive an annual cost-of-living adjustment. Over the past 25 years, we have rarely received updates.

Payment Rates/Conversion Factor

CMS proposed that ASCs be paid on the basis of a conversion factor of 62% of the rates paid to HOPDs. The final regulation is complicated in this regard and represents a modest improvement over the proposal. Based upon its methodology, applying budget-neutrality principles, CMS estimated that 2008 ASC rates would be 67% of the comparable HOPD rate for the same procedure. The actual percentage can only be determined when final 2008 HOPD rates are determined later this year; based on the proposed 2008 rates, ASC rates would represent 65% of HOPD rates. Going forward, it is important to keep in mind that the conversion factor will vary from year to year depending upon a multitude of factors. Most ophthalmic services will enjoy increases above 2007 rates and inflationary updates commencing in 2010. (See "Illustrative Ophthalmic Procedures Payment Rates Chart" at: http://www.ooss.org.)

Transition to New System

The agency agreed with the ASC community's recommendation that the new system be phased in over 4 years, rather than the 2 years proposed by CMS. In 2008, the ASC payment rate would be a blended amount equal to 75% of the applicable calendar year 2007 payment rate and 25% of the applicable calendar year 2008 payment rate. By 2011, the new ASC payment system will be fully implemented. This will have the effect of slowing down the rate of increases in payments for some services (e.g., cataract and VR services) as well as rate of decreases in other services (i.e., the reduction in YAG payments is feathered in over 4 rather than 2 years).

Annual Updates

As you know, ASC base facility rates have not been recalibrated since 1989 and we have rarely enjoyed cost-of-living adjustments.

Commencing in 2008, as part of the annual rulemaking process for HOPDs, ASC payments will be adjusted each year to reflect payments for technology and resources used in furnishing procedures. First, the HOPD APC relative weight adjustments will be calculated. Second, the weights will be applied to ASCs, but further adjusted to ensure budget-neutrality in the ASC setting. Therefore, each year the relative values of procedures will change, albeit generally by small margins. The relative weight for 66984 (cataract extraction with lens insertion) in the HOPD setting has increased virtually every year.

By statutory mandate, ASCs will receive no inflation update in 2009. (However, it is important to note that our rates may increase by virtue of the changes in relative values discussed in the paragraph above.)

Commencing in 2010, ASC rates will be increased by the consumer price index for consumers (CPI-U), which has been in the 3% range the past several years. CMS rejected the ASC community's argument that ASCs should receive the same inflation adjustment as hospitals, i.e., the Hospital Market Basket. OOSS will seek relief in Congress.

Office-type Procedures

Commencing in 2008, payments to ASCs for surgical procedures furnished in physician offices more than 50% of the time (e.g., 65855 [laser trabeculoplasty] and 67228 [destruction of extensive or progressive retinopathy with photocoagulation]) will be limited to the lesser of the ASC rate or the typically lower Medicare Fee Schedule non-facility practice expense amount. Because of budget-neutrality requirements, CMS rejected our recommendation that all surgical services be paid at the ASC rate regardless of historical surgical setting.

OOSS can be proud of the leadership role we have taken in this process of developing a new ASC payment system that is both equitable and stable. It certainly represents an improvement over CMS' past efforts to establish payments based on ASC cost surveys. Although we are certainly disappointed with respect to some of the elements of CMS' regulation, we know that ophthalmic centers' fees will generally be higher in 2008 than in 2007 and should increase annually once the new system is fully implemented.

In the weeks ahead, we will provide assistance to OOSS members as you prepare for implementation of the new payment system. Please plan on attending OOSS' 2007 Symposium, Oct. 5-6, in Atlanta, where the nation's ASC industry experts will provide valuable guidance to facilities hoping to maximize productivity and profitability in this new payment reform era. Visit http://www.ooss.org for complete program and online registration information.

Links to More information

Final ASC payment rule: http://www.ophmanagement.com/links/ascrule

CMS Fact Sheet: http://www.ophmanagement.com/links/cmsfacts

HOPD/ASC proposed rule: http://www.ophmanagement.com/links/hopdasc OM