New CMS Rules to Benefit ASCs

Expanded procedures list a major plus.

BY JERRY HELZNER, SENIOR EDITOR

For almost two decades, owners of ophthalmic ambulatory surgery centers (ASCs) have operated their facilities under a cloud of uncertainty that hindered any attempt at long-term planning for Medicare-covered procedures.

Despite continued — and almost urgent — requests from such organizations as the Outpatient Ophthalmic Surgery Society (OOSS), the American Society of Cataract and Refractive Surgery (ASCRS) and the American Association of Ambulatory Surgery Centers (AAASC), ophthalmic ASCs have for years been operating under a crazy-quilt patchwork of approved procedures and facility reimbursement developed in the 1980s. Though advances in technology have greatly increased the capabilities of ASC surgeons to safely perform many additional ophthalmic procedures, expansion of the "approved" list has been slow to come. Through 2007, numerous procedures repeatedly requested by ASC advocates continued to be excluded.

Reimbursement Has Been Problematic

As an example of the haphazard nature of ophthalmic ASC facility fees, basic cataract surgery and IOL implantation (code 66984) performed in an ASC has been reimbursed at a much lower rate than the same procedure performed in a hospital outpatient department (HOPD), but YAG capsulotomy (66821) done in an ASC has been reimbursed at a far higher rate than the same procedure performed in a HOPD.

All of this is about to change, beginning on Jan. 1, 2008. The change is a result of the Medicare Modernization Act (MMA) of 2003, by which Congress mandated that the Centers for Medicare and Medicaid Services (CMS) implement a new ASC payment system no later than Jan. 1, 2008. In developing the new reimbursement system, CMS also took into account requests from the ASC community to allow an expanded list of procedures to be performed in ophthalmic ASCs.

Though the formulas that will determine the exact facility fees for ophthalmic ASC procedures in 2008 have yet to be finalized, the following Q. and A. should answer most of the questions that surgeons and ASC owners have regarding the new CMS rules. It is important to note that advocates of ophthalmic ASCs continue to petition CMS to resolve some remaining issues, including the level of reimbursement for specific procedures that can be performed in a physician's office as well as in an ASC.

Q. What will be the biggest benefit to ASCs under the new rules?

A. The expansion of the list of procedures that can be performed in ophthalmic ASCs can be considered a total "win" for ASCRS and OOSS. Literally hundreds of additional procedures are being added to the "approved" list.

"The new list includes all procedures with only a few exclusions. It should be significantly less confusing," says William Fishkind, M.D., F.A.C.S., president of OOSS. "In regard to new procedures, many plastic surgery procedures will now be eligible for ASC reimbursement. This is an area of potential growth. Additionally, retinal procedures, especially membrane peels and vitrectomy, are now eligible for payment at a high enough level to make this attractive to ASCs. I would predict exponential growth in this area. Doing these procedures in an ASC is better for patients and fits the mission for ASCs."

Beginning on Jan. 1, almost any ophthalmic procedure can be performed in an ASC, excluding only those services that impose a significant risk or that require an overnight stay. Among the procedures that are now approved for ASCs are 65855 (trabeculoplasty); 67105 (retina repair, photocoagulation); 67145 (prophylaxis of retinal detachment, photocoagulation); 67210 (destruction of retinal lesions, photocoagulation); 67221 (destruction of retinal lesions, photodynamic therapy) and 67228 (destruction of extensive or progressive retinopathy, photocoagulation).

Q. How will ASC facility fees be affected by the new rules?

A. Starting in January, ophthalmic ASC reimbursement rates will be directly pegged to the facility payment schedule for HOPDs. The new rates will be phased in over a 3-year period.

Though payments for some common procedures, notably YAG capsulotomy, will be reduced as a result of the new system, most procedures will qualify for a higher reimbursement than previously. The facility fee for basic cataract surgery and IOL implantation is expected to increase slightly next year. At this writing it appears that the final reimbursement schedule for 2008 will peg ASC reimbursement at a level between 65% and 67% of the HOPD payment.

Michael A. Romansky, Washington counsel for OOSS, offers this assessment of the new payment system:

"There are a number of potential advantages of linking ASC and HOPD fees: First, virtually all HOPD rates are higher than those paid to ASCs. Second, hospital cost and charge data is much more accessible and accurate than that which ASCs are capable of generating. Third, hospitals enjoy annual payment updates; under the new payment system. We will, as well. Fourth, under the linked system, ASCs will be entitled to some of the additional payments that hospitals receive, e.g., for costly and innovative medical devices and drugs. Finally, under a system linked to hospital rates, the ASC and hospital communities would have the same goal — to increase base facility fees — enabling ASCs to ride on the coattails of the more extensive and better-financed hospital lobbying effort.

"Are there disadvantages? I think not. The alternative methodology would be to base rates on a facility cost survey; the last time CMS attempted this, in an unsuccessful 1998 rulemaking effort, cataract facility fees would have been reduced by more than 15%."

"I can see no downside," adds Dr. Fishkind. "OOSS has struggled for many years to hold reimbursement for ASC level and prevent gradual decreases in payments as has occurred with physician payments. We have reached a point where ASC payments would inevitably be cut. We have not had an increase in years. Not even cost of living. With this new system we will receive higher reimbursement for most codes."

Q. Will the new rules help to drive more retina procedures to ASCs?

A. Absolutely. The combination of many additional retina procedures being approved to be performed in ASCs and the pegging of facility payments to HOPD rates constitutes a double incentive to move retina procedures into the ASC environment, says Stephen C. Sheppard, C.P.A., C.O.E., managing principal of Medical Consulting Group LLC headquartered in Springfield, Mo.

Sheppard points out that those retina procedures that have been performed in ophthalmic ASCs have traditionally been reimbursed at a much lower rate than the same procedures done in HOPDs. With ASC facility fees being pegged at approximately two-thirds of HOPD payments, common retina procedures such as pars plana vitrectomy and repair of retinal detachment, scleral buckling, will qualify for facility fees that will be approximately double the 2007 ASC payments by the end of the 3-year phase-in period.

"For many years, posterior segment surgeons have been discouraged or excluded from participation in ASC ownership by the perception that retina surgery is not profitable in the ASC setting. The new CMS rules could more than level the playing field and elevate posterior-segment surgeons to a prominent position in the development of new ASCs," notes Sheppard.

Q. Given the new CMS rules, what is the overall long-term outlook ASCs as both the setting of choice for an increasing number of ophthalmic procedures and as a financial investment for physicians?

A. "Many OOSS members and other ophthalmic ASC owners believe that, for most of their patients, the ASC is the appropriate site of surgery because of its access to state-of-the-art technology, the enhanced productivity that comes with control of the operative environment and the ASC's patient-friendly and convenient setting," says Romansky.

"There are obviously costs involved in building an ASC or owning a piece of another surgeon's facility," he adds. "Many ASCs will welcome to their medical staffs physicians who do not seek to take equity in the ASC. And, of course, the surgeon can always elect to perform surgery in the HOPD. Under the new ASC rules with more equitable payment rates for many ophthalmic procedures, the surgeon and his patients have more options available than ever."

Adds Dr. Fishkind: "Owning an ASC has many benefits beside profitability. In my ASC, I pay my staff so they perform to my expectations providing flawless quality of efficient patient care. My instruments and equipment are maintained properly and are reliable, as they are not mishandled by multiple staff and surgeons unsure of their usage.

"Patient flow is carefully monitored so my time commitment is most efficient. Patient infection rates and complication rates are minimized because of attention to detail and surgery in a clean OR with minimal exposure to pathogens. Patients are happy because they don't have to go to the impersonal hospital for their eye surgery.

"Yes, my ASC adds 25% to the bottom line. It is therefore a profit center. It is a one-specialty non-retina ASC utilized by three anterior segment surgeons. I love working there and benefit from all the above while adding to the bottom line," Dr. Fishkind concludes. OM