Medicare’s 2023 Proposed ASC Payment Rule

In this episode of the Advancing Surgical Care Podcast, ASCA Chief Executive Officer Bill Prentice and ASCA Regulatory Counsel and Director of Government Affairs Kara Newbury discuss the 2023 proposed ASC payment rule released by the Centers for Medicare & Medicaid Services (CMS) on July 15, 2022. Prentice and Newbury provide a topline summary of the 886-page proposal that looks at the proposed inflationary update factor for ASCs, changes to the process for adding additional codes to the ASC Covered Procedures List (ASC-CPL), changes to the Ambulatory Surgical Center Quality Reporting (ASCQR) Program and more. Comments on the proposed rule are due by September 13, 2022.

Transcript

Narrator:   0:06
Welcome to the Advancing Surgical Care Podcast brought to you by ASCA, the Ambulatory Surgery Center Association. ASCA represents the interests of outpatient surgery centers of every specialty and provides advocacy and resources to assist them in delivering safe, high-quality, cost-effective patient care. As with all of ASCA’s communications, please check to make sure you are listening to or viewing our most up-to-date podcasts and announcements.

Bill Prentice:   0:37
Hi, I’m Bill Prentice and I’m ASCA’s CEO and host of this episode. Today I’m pleased to welcome back Kara Newbury, ASCA’s regulatory counsel and director of Government Affairs. And I’ve invited Kara onto the ASC podcast to discuss the proposal for the 2023 outpatient payment and quality reporting rule that was released by the Centers for Medicare & Medicaid Services, or CMS, on July 15. CMS is required by law to issue a rule each year that, among other things, updates the list of procedures that can be performed in ASCs, establishes the inflationary update for those procedures and updates any quality reporting requirements for ambulatory surgery centers for the coming year. ASCA and other interested parties will now have until September 13 to submit comments to this draft rule in an effort to improve it for the ASC community. As is often the case, there are some proposals in the draft that demonstrate that CMS is listening to our input. Regrettably, however, we also believe the draft falls short both in terms of the proposed update factor and by missing a real opportunity to lower costs for both CMS and the Medicare patients they serve. And Kara and I will talk more about that in a moment. But before we do, I want to mention the fact that the proposed rule that we’re about to discuss runs some 886 pages in length, so we won’t have time to get into every detail. But as we complete our analysis and prepare our comments for that September deadline, we will of course continue to share information with all of our members and listeners. And with that introduction, welcome, Kara.

Kara Newbury:   2:08
Thanks, Bill. Good to be here.

Bill Prentice:   2:09
Great. Well, let’s get right to the question of the proposed inflationary update. The proposed rule calls for a 2.7 percent increase for both hospital outpatient departments (HOPD) and ASCs. Given the inflationary pressures on wages, rents, surgical equipment, medical supplies and more that we’re seeing, that’s not a number that anyone can really cheer about. So, Kara, can you explain how CMS arrives at that figure and include some of the backstory about how we’re updated now using the hospital market basket?

Kara Newbury:   2:39
Absolutely, Bill. So, the default in statute is for CMS to update ASCs using the Consumer Price Index for All Urban Consumers (CPI-U), and we have long asked CMS to align our update with that of hospital outpatient departments instead, which has traditionally been higher over the years. So, looking back at what inflation used to be, it was a lot lower than what it is now, and that is why we’ve been asking for this alignment. Unfortunately, as everybody is well aware, inflation is extremely high and much higher than the 2.7 percent proposed updates for ASCs. However, we still feel that it is better for us to be aligned with hospitals because we do expect that the pendulum will swing back, and we don’t want to lose out on any future updates. Of course, right now, it looks bad. As we all know, costs for supplies and, as you mentioned, surgical equipment, rents, wages, and as we all know, there are staffing shortages. And so, we’re certainly going to mention all those things, particularly the increased cost of staffing, when we ask CMS to consider some of the other policy changes. So, this is the last year that we’re set for this trial period, this five-year trial, of us being updated on the hospital market basket. But we would, of course, like to maintain that alignment with hospital outpatient departments moving forward. We do believe there are other policies that CMS could look into and change to better reflect how much ASCs are spending, and one of those is the ASC weight scalar. So, a problem across Medicare programs, and something that I think we need to look at addressing through congressional action or through the administration, is this attempt to maintain budget neutrality in each siloed payment system. So, that’s really where we’re hurt in this update. As well, looking to cut our weight scalar by more than 15 percent for the first time ever. So, I think that there are policies that certainly we can promote that would help ASCs and better reflect the true cost of providing care to our patients.

Bill Prentice:   4:58
Well, that was a lot, Kara. And I know the weight scalar—we could probably spend an entire podcast trying to dive in and talk about the impact of the weight scalar and what we would need to do to change it, and how that would actually be better for the Medicare program, but we won’t do that now. The only thing I’d mention about the hospital market basket is, yes, this is probably the black swan year where the hospital market basket would be lower than the CPI-U, but as you mentioned, in most years that’s not the case. And I don’t think we can expect that CMS would just toggle back and forth to whichever one is better for ASCs. And indeed, in the long run, I think being aligned with the hospitals in this inflation factor is helpful to us because now we have the hospitals’ lobbying power seeking to make that number as high as possible, which we would benefit from. So, I think that’s just an important point for folks to remember, even though this is the odd year where the CPI-U might be higher. Well, Kara, we’re going to take a short break to hear a message from our podcast sponsor, so just stand by and we’ll be right back.

Narrator:   6:04
This episode of the Advancing Surgical Care Podcast is being brought to you by National Medical Billing Services, an ASCA affiliate and leading ASC revenue cycle company that helps ASCs properly capture their revenue and maximize their cash flow in a highly compliant fashion. To learn more about National Medical Billing Services’ wide range of revenue cycle services and analytics, visit nationalascbilling.com.

Bill Prentice:   6:36
Kara, before we paused our conversation, we were talking about the proposed rate update, and clearly we have more to say on that topic as we develop our arguments in the comment period along the lines of the things you were talking about. The other big disappointment in the rule was CMS’ failure to lower costs and improve access for beneficiaries by adding only one of the many viable procedures that ASCs are safely performing on commercial patients and which we believe could be safely performed on some Medicare patients. So even though ASCA provided CMS with a list of 47 codes for procedures that are being safely done on non-Medicare populations, CMS only added one to our list in the proposed rule. Can you comment on that omission as well as the frustrating delay in the nominations process that was supposed to help address our concerns in this area?

Kara Newbury:   7:25
Absolutely, Bill. I think I can—there was some confusing language in the rule, as there was last year, as well. So once again, I have to try to play mind reader with CMS. But we were, of course, supportive of this nominations process. It would have allowed ASCs and other interested parties to submit procedures through a more transparent and open process by a March 1 deadline every year, and then presumably they would be considered and either put into the proposed rule or not, and CMS would be providing a rationale for why they would not add them in the proposed rule. CMS did not have that system up and running for this year, so instead, ASCA submitted codes that we thought were good candidates really for the ASC Covered Procedures List (ASC-CPL). Most of the codes that we submitted are done predominantly in an outpatient setting. So that is, of course, mostly private pay data that we have, but since we knew that they were being done predominantly outpatient, we thought that they would also be good candidates for the ASC setting. As you mentioned, CMS only added one ENT code and that was extremely disappointing. What was more disappointing, however, was that this nominations process was delayed an entire additional year. CMS acts as if it was only delayed until next year’s rulemaking; however, if you read what’s in the Code of Federal Regulations section, it already stated that it was for the evaluation of codes starting by a March 1, 2023, deadline which would have been for 2024 rulemaking. So, we’re now actually, with this one-year delay to January 1, 2024, we are looking at a 2025 rulemaking for this new nominations process. So, two years delayed from what was in the original rulemaking on this topic last year. Now I will say, ASCA has been successful in the past requesting codes, but it wasn’t really through the process that they’ve laid out here, which was just submitting codes in your comment letter and hoping for the best. We’ve been successful in the past taking surgeons in to CMS and advocating for procedures prior to rulemaking, and we’ll continue to do that until this new nominations process is in place. Now one area where we were successful was keeping a few codes off of the inpatient-only list last year. We were successful in keeping total shoulder arthroplasty, a lumbar fusion code and total ankle arthroplasty actually from going back onto the inpatient-only list. We will actively promote those procedures in our comments to be added to the ASC Covered Procedures List for next year, but I’m not overly optimistic because, as I said, CMS hasn’t shown a real desire to add codes to our ASC Covered Procedures List that were requested in comments. And in fact, there is no transparency; they don’t always address in the final rule every code that was requested and why or why not they are going to add it. So, very disappointed in, as I said, the lack of transparency in that process. We will still continue to ask for codes, but I think we need to go back to where we take in our surgeons, and it’s going to be a piecemeal process as it used to be, but really asking for codes prior to rulemaking like we used to do.

Bill Prentice:   10:50
Yes, that’s very frustrating, Kara. And we know that there is a list of criteria that the medical directors are supposed to look to in terms of making that judgment about whether a procedure can be safely performed in the outpatient setting, and then in the ASC setting. But without that feedback, without telling us where any of these procedures that we believe belong on our list fall short, it’s hard for us to marshal the arguments to overcome that. As you said, this is looking now like almost a two-year delay in using this new process, this more transparent process. We’re going to have to, I think, work even harder to bring data and clinicians to CMS and try and drive change in that less effective way, but it’s the only avenue available to us. So, obviously, we’ve been looking for our surgical community to always identify procedures that we think belong on our list and try and use that process until we get this nominations process in place. Well, as I mentioned earlier, we’re going to be voicing our objections to CMS on all these points, but for now, let’s move on to a couple of small victories that we see in the proposed rule. So, for starters, CMS is proposing a new ASC payment policy that would result in higher payment when a code combination is more complex and a costlier version of the procedure is performed. Kara, I know this is a bit complicated, but what can you tell us about this proposal right now?

Kara Newbury:   12:15
Sure, and I know that I have been providing a negative view of CMS payment policy, but actually, I was quite impressed with their attempt to address this issue. And it is fairly complex, but when there’s a primary code that’s performed in conjunction with add-on codes, which typically have a payment indicator of N-1 and N-1 codes are not separately reimbursed, so there’s no additional payment for those N-1 codes. However, it is often the case that those codes, the primary code and the N-1 add-on codes, when done in conjunction with each other become a more complex and, of course, complex equals costly, so a more complex and costlier procedure. Now on the OPPS side, the Outpatient Prospective Payment System, or hospital outpatient department, there is what they refer to as a complexity adjustment. So, when those codes are done in conjunction with each other, CMS bumps up the payment rate for that combination of codes to better reflect the true cost. So, CMS has identified 52 of these combinations for codes that would receive a complexity adjustment in the HOPD and are also payable in the ASC setting. And CMS is proposing for the first time ever to provide a complexity adjustment to ASCs for these combinations of codes. I thought it was interesting because CMS did do an evaluation in this rule, and according to them, they said for the vast majority of codes on average, CMS pays 55 percent of what an HOPD gets for the ASC setting. Now, I would argue that it’s actually a little lower, I think it’s closer to about 50 percent on average, but we’ll go with what they say, so 55 percent. But when CMS looked at these complexity-adjusted code combinations, they found that the ASC was getting reimbursed between 25 and 35 percent of what the hospital outpatient department is receiving, which is obviously significantly lower than 55 percent. So that’s making those codes basically unavailable in the ASC setting. So, CMS is proposing a new C code. So, for these combinations of codes, there are going to be 52 C codes for 2023, assuming that this proposal gets finalized, and it provides a reimbursement rate for the primary and add-on code in this complex procedure. And so, it’s going to bump up the reimbursement rate and hopefully get us closer to that 55 percent of HOPD rates instead of the 25 to 35 that CMS has estimated is currently the case. So just to wrap it up, basically, like I said, CMS would provide ASCs with a higher payment rate for a complex code combination that better reflects the complex and costlier version of the procedure that’s being performed.

Bill Prentice:   15:07
And important to remember, even if we get that higher reimbursement, if that leads to procedures migrating from the hospital outpatient department to the ASC, the system will still save money. So, that’s the thing that’s maddening is that this lack of interest on CMS’ part to try and drive volume to the lower-cost setting, which would actually provide a lot more efficient care to Medicare beneficiaries, potentially lower the beneficiaries’ copays and deductibles, depending upon what they’re paying, and also just free up money in the system to be spent on other important programs. So, it’s just really frustrating that it’s like pulling teeth to try and get these changes that make so much economic sense. Last thing I want to talk about is the proposed changes to the ASC Quality Reporting Program, where it appears CMS has belatedly responded to one of ASCA’s objections from last year. And specifically, I’m referring to ASC-11 and the requirement that ASCs report on postoperative testing of cataract patients. Kara, can you explain why and how we pushed back against that proposal and what we can expect in the final rule?

Kara Newbury:   16:17
Bill, for those listeners who have been around the ASC community for a while, you’ll know that this saga actually goes back to about 2013 when the measure was first proposed for addition to the ASC Quality Reporting Program. We pushed back at that time, were able to get it made voluntary. Originally, CMS had mandated it all the way back then nine years ago, and then out of the blue in the 2022 rule, CMS proposed and then finalized to make it mandatory again, even though we objected, all of the ophthalmic organizations objected. It’s an important and interesting measure—it’s Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery—but it’s not a facility measure. It was tested and approved as a physician-level measure. The key data points are when the patient visits with a physician preoperatively and then during the global window within 90 days postop. So, it’s just really not information that the ASC facility has, and it’s not information that the ASC can really act upon to improve any processes of the facility. So, we’ve been pushing back on this, like I said, for years, and really we just wanted it to be removed from our program because, as we know, if it stays in there even in a voluntary fashion as it is now, that there’s always the chance that CMS will do what they did in 2022 and make it mandatory. But we are happy to hear that CMS did listen to ASCA and the ophthalmic community and has proposed to make this voluntary. So certainly, we will be commenting in strong support for this proposal, and we would request that all of our ophthalmic facilities also bombard CMS with their resounding support for this proposal to ensure that it does not stay in as a mandatory measure, like it was finalized to do as of 2022.

Bill Prentice:   18:09
Well, that’s good to hear that they listened and hopefully that makes its way through to the final rule. And I think it really speaks to the importance of not just relying on ASCA but having the entire ASC community chime in when we see things that need to be changed in these rules. And I’m hoping that all our listeners here will pay attention to our proposed comments, will submit their own comments for or against different elements of this rule and an offer to make it better. So, I know we’ve covered the high and some low points, and as I promised earlier, ASCA members can look forward to getting more analysis in the weeks ahead as you and your team dive deeper into the rule and look for things that need to be addressed. But I want to thank you and particularly Alex Taira on your staff for the quick study of a very expansive proposal. So, thanks, Kara.

Kara Newbury:   19:01
Absolutely, Bill.

Bill Prentice:   19:03
So once again, if anyone listening has additional questions, please don’t hesitate to contact us or to visit the ASCA website where more details on these and other important regulatory issues can be found. And finally, before signing off, I would like to thank our podcast sponsor, National Medical Billing Services, an ASCA affiliate and leading ASC revenue cycle company. To learn more, visit nationalascbilling.com. Thanks.