MedPAC Issues ASC Payment Recommendations: 10 Key Takeaways

April 19, 2018

The Medicare Payment Advisory Commission (MedPAC), an independent federal advisory commission that provides Congress with analysis and policy advice on the Medicare program, recently issued its 2018 report. Within this report is a chapter dedicated to ambulatory surgery centers (ASCs). This chapter provides recommendations concerning ASC Medicare payment systems and includes some interesting ASC statistics.

Here are 10 key takeaways from the report.

1. MedPAC recommended that Congress eliminate the calendar year 2019 update to ASC Medicare payment rates. MedPAC’s rationale: “The volume of services per beneficiary declined slightly in 2016, the complexity of services provided increased, and the number of ASCs increased. Also, ASCs appear to have adequate access to capital, and Medicare payments to ASCs have continued to grow. Moreover, even though we do not have cost data and we have reservations about the quality data, the indicators we have suggest that payments have been adequate.”

2. MedPAC recommended that the Secretary of Health and Human Services require ASCs to report cost data. MedPAC’s rationale: “Cost data would enable the Centers for Medicare & Medicaid Services (CMS) and [MedPAC] to examine the growth of ASCs’ costs over time and evaluate Medicare payments relative to the costs of an efficient provider, which would help inform decisions about the ASC payment update. Cost data are also needed to evaluate whether an alternative input price index would be an appropriate proxy for ASC costs.”

3. MedPAC recommended CMS use cost data to examine whether an existing Medicare price index is an appropriate proxy for ASC costs or an ASC-specific market basket should be developed, noting the following: “A new ASC market basket could include the same types of costs that appear in the hospital market basket or Medicare Economic Index but with different cost weights that reflect ASCs’ unique cost structure.”

4. MedPAC noted that services provided in ASCs rather than hospital outpatient departments (HOPDs) is less costly to beneficiaries. Cost sharing is higher under the ASC payment system for only 84 of 3,456 HCPCS codes covered under the ASC payment system.

5. Medicare payment rates for most surgical services are 92% higher in HOPDs than in ASCs.

6. From 2011 to 2015, the number of ASCs grew at an average annual rate of 1.3%. In 2016, the number of ASCs increased 1.4%. Ninety-two percent of these new ASCs in 2016 were for-profit facilities.

7. From 2006 to 2016, the number of ASCs grew by 23%, from 4,490 to 5,532.

8. In 2016, the number of new ASCs (142) more than doubled the number that closed or merged (63).

9. Outpatient surgical procedures decreased in ASCs and increased in HOPDs in 2016. From 2011 through 2015, average annual growth in volume per fee-for-service (FFS) beneficiary of surgical services covered by the ASC payment system was 0.7% in ASCs and 1.4% in HOPDs. In 2016, volume per FFS beneficiary decreased by 0.5% in ASCs and increased by 3.2% in HOPDs. One possible explanation for the higher growth of surgical services in HOPDs relative to ASCs over the 2011 through 2016 period offered by MedPAC was the following: “Medicare payment rates have become much higher in HOPDs than in ASCs, which might make it less financially attractive to provide surgical services for Medicare patients in ASCs.”

10. MedPAC identified two possible new measures it believed might allow for better assessment of the quality of care provided in ASCs: 1) number of Medicare beneficiaries discharged from ASCs who had a subsequent unplanned hospital visit and 2) rate of surgical site infections occurring at ASCs.

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