Twenty-five years ago, when I commenced my representation of the Outpatient Ophthalmic Surgery Society, there were perhaps two hundred ambulatory surgery centers in the country, with a few dozen serving exclusively ophthalmic patients. The government had just established a new Medicare ASC benefit, under which an ASC would receive a facility fee of about $330 for performing a cataract operation. That rate, as well as the fees established for the hundred or so other services on the ASC procedures list, were essentially plucked from thin air by the bureaucrats at CMS. Given the similarity of the procedures being performed in ASCs to those being furnished in hospitals, the founders of OOSS quickly arrived at the conclusion that rates for ASC-based procedures should in some way be derived from payments made to hospitals.

After a quarter-century of lobbying, we've accomplished that very objective, subject to a few important limitations. However, if we are to maintain modest growth in ASC payment rates and avoid greater disparity in the gap between the rates paid to ASCs and hospital outpatient departments (HOPD), all ASC stakeholders — facilities, surgeons, management and development companies, suppliers — will have to be vigilant in monitoring the activities of, and lobbying, Congress, the Centers for Medicare and Medicaid Services, and a plethora of other federal agencies (e.g., FDA, FTC, MedPAC, the Government Accountability Office) for sensible policy reform. Is this achievable? I can recall countless times over the years when the ophthalmic ASC community has faced overwhelming odds — in 1990, when Representative Pete Stark tried to eliminate physician ownership of ASCs; in 1998, when CMS threatened to reduce ASC facility fees by 10-15 percent, are two such examples — and prevailed.

Although mainstream ophthalmology may fear the consequences of health care reform — of course, we all hope that Congress will fix the thorny physician fee update problem once and for all — ASCs should gain in prominence under a restructured health care delivery system. Why is this? Simply stated, ASCs should be part of any solution. We are the best alternative to the higher-priced hospital environment. With 5,300 facilities, we offer expanded access to serve 40 million uninsured Americans. We charge the government less. We charge the beneficiary less. We have optimal results. We are the answer to reform!

ASC Reform: 2008-2009

OOSS had a number of goals when we embarked upon our campaign to reform the ASC payment system several years ago. These principles provide the foundation for our lobbying campaign with respect to health care reform in 2009.

First, we said the government shouldn't be telling us where to do surgery. All ophthalmic surgical procedures should be on the list of services that can be performed in an ASC — and CMS agreed. Now, virtually every ophthalmic surgical procedure can now be performed in the ASC and generate a facility fee for the facility.

Second, we believe that facility fees should be fair and equitable. Where CMS's efforts to set fees have been historically unfavorable to ASCs, we embraced the notion that there should be a linkage between hospital and ASC rates so that ours would be pegged to the steady growth in hospital payments. In great measure, CMS agreed. The cataract facility fee has leveled off and will grow modestly going forward, while glaucoma and retina fees will generates substantial revenues for ASCs in the future. However, there remain some serious flaws in this linkage between ASC and hospital rates, as discussed below.

Third, hospitals receive annual inflation updates. Although ASCs haven't been afforded cost-of-living adjustments since 2004, the good news is that we're going to receive these updates commencing in 2010. In its proposed 2010 ASC payment rule, CMS has indicated that it will provide an update based on the Consumer Price Update (Urban), which is currently projected to be 0.6 percent. The ASC community has argued that since surgery centers treat the same patients and consume commensurate resources as hospitals, our facilities should be afforded the same inflation update, i.e., the Hospital Market Basket, which is typically in the three percent range. It is all the more important that ASCs receive the higher inflator because Congress, in an effort to generate budget savings to pay for health care reform, is expected to reduce all providers' annual updates by a 1.3 percent "productivity adjustment."

There is no question that we have achieved a great deal with reform of the ASC payment system. The new payment mechanism is tied to the HOPD system, which is rational and stable. ASC rates can be expected to increase over time. All ophthalmic services are now eligible for facility reimbursement. ASCs now receive payments for innovative devices and drugs heretofore afforded only to hospitals. But there are flaws in the ASC system that need to be corrected.

When we originally sought a linkage to hospital rates, our goal was to secure payments at 75 percent of hospital rates. However, in the budget crunch at the time of enactment, Congress directed CMS to render the new payment system budget neutral; as such, the 2008 ASC rates were set at about 62 percent of hospital reimbursements. Further, in setting the 2009 rates, CMS applied not one, but two, budget neutrality adjustments to the ASC relative weights, which had the effect of reducing ASC payments to 59 percent of HOPD rates. More troubling is that if CMS continues to apply this second adjustment (known as the "rescaler") on an annual basis, ASC rates could measure as low as 52 percent of hospital rates within five years.

ASC Reform, Phase II

The ASC community at large and the Outpatient Ophthalmic Surgery Society in particular is not satisfied with this scenario. We think that there is a solution: "The Ambulatory Surgery Center Access Act of 2009" (HR 2049). This legislation would lock in rates at 59 percent of what HOPDs receive for comparable surgical services. While that's below our original target of 75 percent, we feel it's credible at a time when Congress is cutting everywhere to generate savings to pay for health care reform. Under this legislation, ASCs would receive the same Hospital Market Basket index as the hospital industry, and be afforded the same device coverage as hospitals.

In its 2009 final rule and its 2010 proposed payment regulation, CMS has delayed until some future time implementing Congress's mandate that ASCs be subject to quality reporting. Our legislation would require that CMS, prior to implementation of any quality reporting requirement, consult with medical organizations and ASC groups. Although providers are often skeptical of any new government regulations, I believe that ASCs are in an enviable position — we know that ophthalmic ASCs offer higher quality care and exceptional outcomes at lower cost than the hospital alternative. If the same quality measures are applied to ASCs and hospitals alike, it will burnish our image among the public as well as regulatory bodies such as CMS. The legislation would also require that the data on quality measures be published on the internet so that beneficiaries can see the results vis-à-vis those of hospitals in their communities. We also want beneficiaries to be informed about the comparative out-of-pocket costs of surgical care provided in their local hospitals vs. ASCs.

Being A Part Of The Solution

The OOSS leadership believes that fine-tuning the current ASC payment system is in order. "The Ambulatory Surgery Center Access Act of 2009" provides such a vehicle. Elements of this legislation can be implemented by CMS as part of ASC payment regulations without further Congressional action. Components of the bill will hopefully be included in health care reform legislation.

We will face a number of other challenges in the year ahead: health care reform; efforts to curb physician investment in ASCs; aggressive action by federal, state and accreditation organizations enforcing new Medicare ASC Conditions for Coverage, to name a few. To accomplish our objectives, we will need the help of all of you. We will be asking you to engage your Representatives and Senators on Capitol Hill, to write to CMS, to join or maintain your membership in OOSS, and to contribute to the OOSS Political Action Committee. The challenge is great, but for the ophthalmic ASC, the opportunities have never been greater. OM

Michael A. Romansky, JD, Washington Counsel and Vice President of Corporate Development, Outpatient Ophthalmic Surgery Society (OOSS), Washington, DC.