Scott Faringer is the administrator of The Tri-City Orthopaedic Center in Richland, Wash., a USPI facility. He is currently the USPI Washington State Advocacy member, a position for which he has visited Washington, D.C., to pitch a new ASC reimbursement methodology to elected officials. He discusses four issues that impact ASC reimbursement rates.
1. ASC reimbursement is based on general, not healthcare-specific, inflation. Mr. Faringer says while there is "no magic" to the methodology his colleagues are pitching to the legislature, the main problem with federal reimbursement rates is that ASCs are thrown into a different inflationary markup than hospitals. While hospital reimbursement is determined by a "market basket" that looks at inflation based on healthcare spending, ASC reimbursement is based on an inflationary markup called the Consumer Price Index, which is associated with automobiles, dishwashers and other products.
Mr. Faringer says this discrepancy is important because the inflation of the market basket tends to increase more. "We don't feel we should be paid as much as hospitals, but we also don't feel we should be paid 56 percent of hospital reimbursement," Mr. Faringer says.
2. ASCs are losing ground to hospitals in terms of reimbursement over time. In 2008, Medicare began paying for surgery-related facility services provided in ASCs — such as operative nursing, recovery care, anesthetics, drugs and supplies — using a payment system based on the hospital outpatient prospective payment system. The new system has several hundred procedure groups, compared to the old ASC payment system, which had nine. The new ASC payment system sets payments for individual services based on relative weights, a conversion factor and adjustments for geographic differences in input prices. Each of the nearly 3,400 procedures approved for payment in an ASC is classified into an ambulatory payment classification group based on clinical and cost similarity, and all services within an APC have the same payment rate.
Mr. Faringer says when the federal government made the transition to APCs in 2008, surgery centers received around 75 percent of hospital reimbursement. Since then, that number has decreased to 56 percent. "Through the two inflationary conversions over time, we're now at 56 percent, so you can see we're losing ground with hospital reimbursement," he says. "We just don't feel that's fair." If ASC reimbursement rates are based on different inflationary markups than hospitals, then the discrepancy in rates between surgery centers and HOPDs may continue to increase.
3. High supply costs at ASCs make reimbursement changes more important. Mr. Faringer says surgery centers are in dire need of reimbursement reform because their fixed costs are often higher. "In many instances, we can't achieve the same cost-savings in supplies [as hospitals] because they have greater volume," he says. "In a lot of ways, our costs are harder to control, yet [hospitals] get the larger inflationary increases." Hospitals, which buy many supplies at a time, often have greater leverage with vendors than individual ASCs.
4. The eventual goal: 75 percent of hospital reimbursement. Mr. Faringer says while CMS has so far ignored requests to change the inflationary markup methodology, the eventual goal is to get back to 75 percent of hospital reimbursement for ASCs. "That was the goal of the federal government when [it] moved from the old grouper methodology to the APC methodology," he says. "We should have been paid on the same inflationary increases as hospitals."
A bill to tie ASC reimbursement methodology to the hospital market basket is working its way through Congress, Mr. Faringer says. "It passed the House, but I have not heard when the Senate is going to look at it," he says. "If the Senate chooses not to pass it, then we just keep on working."
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1. ASC reimbursement is based on general, not healthcare-specific, inflation. Mr. Faringer says while there is "no magic" to the methodology his colleagues are pitching to the legislature, the main problem with federal reimbursement rates is that ASCs are thrown into a different inflationary markup than hospitals. While hospital reimbursement is determined by a "market basket" that looks at inflation based on healthcare spending, ASC reimbursement is based on an inflationary markup called the Consumer Price Index, which is associated with automobiles, dishwashers and other products.
Mr. Faringer says this discrepancy is important because the inflation of the market basket tends to increase more. "We don't feel we should be paid as much as hospitals, but we also don't feel we should be paid 56 percent of hospital reimbursement," Mr. Faringer says.
2. ASCs are losing ground to hospitals in terms of reimbursement over time. In 2008, Medicare began paying for surgery-related facility services provided in ASCs — such as operative nursing, recovery care, anesthetics, drugs and supplies — using a payment system based on the hospital outpatient prospective payment system. The new system has several hundred procedure groups, compared to the old ASC payment system, which had nine. The new ASC payment system sets payments for individual services based on relative weights, a conversion factor and adjustments for geographic differences in input prices. Each of the nearly 3,400 procedures approved for payment in an ASC is classified into an ambulatory payment classification group based on clinical and cost similarity, and all services within an APC have the same payment rate.
Mr. Faringer says when the federal government made the transition to APCs in 2008, surgery centers received around 75 percent of hospital reimbursement. Since then, that number has decreased to 56 percent. "Through the two inflationary conversions over time, we're now at 56 percent, so you can see we're losing ground with hospital reimbursement," he says. "We just don't feel that's fair." If ASC reimbursement rates are based on different inflationary markups than hospitals, then the discrepancy in rates between surgery centers and HOPDs may continue to increase.
3. High supply costs at ASCs make reimbursement changes more important. Mr. Faringer says surgery centers are in dire need of reimbursement reform because their fixed costs are often higher. "In many instances, we can't achieve the same cost-savings in supplies [as hospitals] because they have greater volume," he says. "In a lot of ways, our costs are harder to control, yet [hospitals] get the larger inflationary increases." Hospitals, which buy many supplies at a time, often have greater leverage with vendors than individual ASCs.
4. The eventual goal: 75 percent of hospital reimbursement. Mr. Faringer says while CMS has so far ignored requests to change the inflationary markup methodology, the eventual goal is to get back to 75 percent of hospital reimbursement for ASCs. "That was the goal of the federal government when [it] moved from the old grouper methodology to the APC methodology," he says. "We should have been paid on the same inflationary increases as hospitals."
A bill to tie ASC reimbursement methodology to the hospital market basket is working its way through Congress, Mr. Faringer says. "It passed the House, but I have not heard when the Senate is going to look at it," he says. "If the Senate chooses not to pass it, then we just keep on working."
Learn more about USPI.
Related Articles on Coding, Billing and Collections:
Surgery Center Coding Guidance: Telescopic Intraocular Lens
MedPAC Recommends 0.5% Payment Increase for ASCs
CMS Corrects 2012 Medicare Rates