WASHINGTON WATCH

The Legislative and Regulatory Climate for the Ophthalmic ASC: Challenges and Opportunities in 2015

BY MICHAEL ROMANSKY, JD

An old administration, a new Republican Congress and, yes, more partisanship and legislative gridlock — what does this mean for our health care system? Will healthcare reform be repealed, derailed or substantially modified in the upcoming year? Will patients, angry at the prospect of losing their existing coverage and physician networks, avoid the new insurance mandate and opt to give up coverage altogether? Will sustainable growth rate (SGR) be resolved in 2015 or 2016 — or even in our lifetimes? For purposes of forecasting how our ASCs will be paid and regulated, does the resolution of these “big picture” political, health policy, economic and regulatory matters really make a crucial difference?

In this series of two articles, I’ll focus on the activities coming out of the Nation’s Capital that have the potential to impact the delivery of care by ophthalmic ASCs. What will ASCs be paid? What will hospitals be paid? How will ASC quality and outcomes be measured? How will our centers be regulated? And, importantly, what can the ASC surgeon and staff do to strengthen the voice of the ASC and our ophthalmology communities in Washington?

ASC Payments in 2014

In late November, CMS published its final 2015 ASC payment regulation. The agency is updating rates by 1.4%. With respect to eye surgery, the following is a representative sampling of high-volume procedures and their payment rates.

The ASC industry is dissatisfied with the annual updates provided to our facilities and will continue to strenuously object to CMS’s use of the Consumer Price Index-Urban (CPI-U) as an inflator, urging instead that facilities should be afforded the Hospital Market Basket, which is provided to hospital outpatient departments and is typically about a point higher. Because ASCs treat the same patients for the same conditions and consume comparable resources in delivering surgical care, there is no justification for ASCs receiving a lesser increase than hospitals. We’ll continue to raise concerns regarding the impact of these irrational and arbitrary cost-of-living differentials on the growing disparity in payment rates between ASCs and hospitals.

Finally, as a failsafe, the ASC community will introduce and seek passage of legislation this year for The ASC Quality and Access Act of 2015, which, among other items, would direct CMS to provide ASCs with the same annual update as hospitals. This bill would accomplish a number of additional objectives: add an ASC voice to the Advisory Panel on Hospital Outpatient Payment (important since our rates are based on hospital payments) and require CMS to disclose the criteria it uses to determine which procedures may be performed in the ASC setting.

Cost Reporting for ASCs

For years, the Medicare Payment Advisory Commission (MedPAC) has recommended that Congress require ASCs to submit to some form of cost reporting as a condition for receiving an annual update. The ASC industry will continue to oppose any form of facility cost reporting. Why? The rates ASCs are paid are based on payments to hospital outpatient departments (HOPDs). As such, ASC costs are irrelevant. Moreover, the administrative and financial burden on surgery centers would be substantial. We’re pleased that the 2015 payment rule doesn’t include a cost-reporting mandate, nor do we believe that Congress — at least at this juncture — will adopt one.

Leveling the Playing Field Between ASCs and Hospitals

Federal policymakers are at last beginning to understand the perverse consequences emanating from a reimbursement system that overpays hospitals and underpays ASCs for providing the same services. For the first time in the 30-plus year history of the ASC industry, about as many surgery centers are closing as are opening each year. Moreover, hundreds of millions of Medicare dollars are being wasted as hospitals acquire ASCs and convert them to HOPD status to secure substantially higher reimbursements. To illustrate, the day after such a conversion, the new “hospital” entity (same patient, same location, same surgeons, same staff, same facility costs) receives $960 for cataract surgery, compared to the $1,749 it was paid the day before when it was an ASC. This makes no sense.

In a quest to achieve budget savings and address myriad federal deficit issues — and, indeed, perhaps pay for the SGR fix — Congress is looking for new ideas to generate significant Medicare savings. And, with hospitals accounting for the lion’s share of program expenditures, Washington policy wonks are looking in places heretofore off limits. In its recently released Report to Congress, MedPAC delivered some far-reaching and unprecedented options to the budget scalpers on Capitol Hill. The Commission is guided by three principles: (1) patients should have access to all appropriate settings; (2) a prudent purchaser should not pay more for the same service in alternate settings; and, (3) Medicare should base its rates on the resources needed to treat patients in the lowest cost, clinically appropriate setting.

How do these principles translate into policy and payments? MedPAC is advocating that HOPDs be paid at the ASC rates (which, as noted above, is about 40% lower than current hospital payments) for services: (1) that are furnished in ASCs more than half the time; (2) that are infrequently provided with an emergency room visit; and, (3) where patient severity in the HOPD is no greater than in the ASC. Most high-volume eye surgeries would meet these parameters. Will Congress take the plunge and adopt this proposal? Time will tell, but the approach is being seriously considered on Capitol Hill.

Why should ASCs care about this development when our rates might not be increased? There are a number of reasons for an enthusiastic embrace of such a proposal by the ophthalmic ASC community. First, services will undoubtedly migrate from the HOPD to surgery centers — many hospitals are less than enamored about ophthalmic surgery and this concern would be heightened if hospital payment rates are substantially reduced. Second, the wide disparity in payments to HOPDs and ASCs would be significantly narrowed. Third, the fact that ASCs and hospitals would be reimbursed at the same rate for many procedures solidifies our case that our centers should receive the same annual update. And, importantly, ASCs and hospitals would have identical interests in lobbying for higher payments, allowing surgery centers to ride the coattails of the gargantuan hospital lobbying forces. All in all, were Congress to adopt this MedPAC recommendation, the increase in revenues to ASCs from the expanded volume of cataract, vitreoretinal and other cases likely would be substantial. ■