Medicare’s 2023 Final ASC Payment Rule

ASCA Chief Executive Officer Bill Prentice talks with ASCA Regulatory Counsel and Director of Government Affairs Kara Newbury about key provisions of Medicare’s 2023 final ASC payment rule released by the Centers for Medicare & Medicaid Services (CMS) on November 1, 2022. The two discuss new complexity adjustments CMS adopted for ASCs, the inflation adjustment made to ASC reimbursement rates, changes to the ASC Covered Procedures List (ASC-CPL) and the status of ASC quality reporting measure ASC-11. They also talk about ASCA’s plans for responding to the new rule and tools ASCA will be offering its members to help them adapt to changes the 2023 rule contains. 

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 am ASCA’s CEO and the host of this episode. On this episode of the ASC podcast, I’m very pleased to welcome back Kara Newbury, ASCA’s regulatory counsel and director of government affairs. And I’ve invited Kara onto the podcast today to discuss the final 2023 outpatient hospital and surgical center payment and quality reporting rule that was released by the Centers for Medicare & Medicaid Services, or CMS, on November 1. As you probably know, CMS is required by law to issue a rule each year to authorize the procedures that can be performed in ASCs, establish the reimbursements for them, set quality reporting requirements and a whole lot more for surgery centers, and these rules will apply for all of 2023. ASCA and other interested parties make proposals to CMS throughout the calendar year, and we also submit detailed comments and recommendations when the proposed rule is published in the summer, in the hopes of improving it by the time it’s finalized. And as is typically the case, the final rule that was released last week accepted some of our recommendations and unfortunately was silent on others. And we’re not alone in that case—other providers have the same experience of not knowing how or why some decisions get made by the agency, and it leaves us guessing rather than being able to address a number of substantive issues. In one regard, CMS has acknowledged the need for a more transparent process, and we’ll talk more about that in a moment with Kara. On balance, I do want to say that we believe the 2023 rule does contain several positive provisions for ASCs, despite some that continue to disappoint us. For instance, we’re pleased that CMS increased the inflation update from what was proposed initially, but it still unfortunately falls far short of addressing the escalating costs that surgery centers are experiencing in staffing, services, supplies and other things. The bottom line is that CMS needs to do a whole lot more to support ASCs in confronting the rising cost of providing care to beneficiaries, or really risk losing access to the outstanding care and significant cost savings that we provide. Now, before I bring Kara into the conversation, I should mention that the actual rule that we’re about to discuss runs some 1,764 pages in length. So accordingly, this podcast discussion will only cover a few highlights or lowlights. In the days ahead, we’ll provide additional analysis as well as a rate calculator to determine what ASCs will be paid locally. So, with that long introduction, Kara, welcome back to the podcast.

Kara Newbury:   3:05
Thanks, Bill. Good to be here.

Bill Prentice:   3:07
Well, let’s start by unpacking some of the reimbursement issues with the rule. As I mentioned, we are pleased to see an improvement in the inflationary factor that we asked for, but it still falls short of the real-world experience of what ASCs are living through in terms of the pressures on things like employment, real estate, rents, medical supplies and more of the things I mentioned earlier. Kara, can you give our listeners an overview of the increases and how they were determined?

Kara Newbury:   3:32
Sure, Bill. So, the ASCs are right now updated based on the hospital market basket, which of course we had been asking for for years, and the hospital market basket takes into account different costs and the rising costs in healthcare settings. Unfortunately, it does lag, the data lags, behind some other sources of updates, such as the Consumer Price Index for All Urban Consumers, which we used to be updated on. So, everyone’s probably saying, “Well, inflation is showing a much steeper increase than even 3.8 percent.” Unfortunately, like I said, ours is based solely on the hospital market basket, and the data is a little behind. With that being said, at least this is a little better than the 2.7 percent that we saw in the proposed rule because CMS does use updated figures for them as they become available. We could have a very long podcast discussion some time about maybe what CMS should or could do to more accurately reflect the rising cost of healthcare, but we probably don’t have time on this call today. But just suffice it to say that it is a modest increase of about 1.1 percent over what was in the proposed rule; that will vary, of course, significantly by specialty. I’ve already started doing just a little bit of analysis, and I did find it interesting that the GI codes that are in the top 100 by volume, the ophthalmic codes that are in the top 100 by volume and the orthopedic that are in the top 100 by volume are going to see a slightly lower update on average. And so, I think that it’s important to note that while it is 3.8 percent, you really do need to go look at your specific codes and the specialties because it’s going to vary greatly, not only by specialty but even by individual code, what the facility is going to see in terms of their update. I do also just want to very briefly mention, because once again, we could have an entire podcast on this topic, but I do want to mention that the disparity in the conversion factor between ASCs and HOPDs in the final rule is actually slightly smaller. And that’s because there was a Supreme Court case that came out impacting the way that outpatient drugs are paid in certain hospitals, known as 340B hospitals, and it impacts the final conversion factor and the rates for HOPDs but doesn’t have as significant of an impact on ASCs because we don’t have that same payment policy. So, if you’re looking at it, and you’re saying—well, especially if you see my presentation, my webinar later this year—you’ll see that actually the disparity between the conversion factor is smaller and also our weight scalar goes up between the proposed and final rules. And I think that those are anomalies—nothing that I would take as a big win for ASCs or CMS recognizing our value, but just kind of quirks due to this completely separate payment issue that hospital outpatient departments had to face this year.

Bill Prentice:   6:38
Got it. You’re correct; we could probably have a whole podcast on this topic alone. And just as a reminder to our listeners, that inflationary update we received is the same for the hospital outpatient departments, right?

Kara Newbury:   6:50
Absolutely, yes.

Bill Prentice:   6:52
Great. Alright, well Kara, we need to pause for just a moment to hear a short message from our podcast sponsor. Stand by, and we’ll be right back.

Narrator:   7:00
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:   7:31
So, Kara, in my opening remarks, I said that CMS has acknowledged the need to be more transparent about some of their decision making. And, as you know, I was referencing the ASC Covered Procedures List, or ASC-CPL. Every year, we ask CMS to expand the ASC-CPL for very specific procedures and we make that request based upon clinical data, which demonstrates that certain procedures are being safely performed in ASCs for patients with commercial insurance, including oftentimes patients in an age cohort approaching the Medicare age. As they do almost every year, CMS approved a few of those procedures, but not nearly all the procedures that we asked for. And I think we all found that very disappointing. Can you talk about our submission versus what was approved and also what CMS has said about making this process more transparent?

Kara Newbury:   8:21
Absolutely, Bill. And you’re right; it’s a constant struggle trying to get the information to CMS and making sure that they’re really digesting what we’re giving them. So, CMS did add four procedures to the ASC Covered Procedures List. So, I guess we have to give a little credit because there was only one code that was proposed in the proposed rule of note—and I think I was excited, I told you the day the rule came out, 19307, which is a mastectomy code, it is something that we’ve been asking for for over a decade and a lot of puzzled individuals didn’t know why it wasn’t on our list. So, at least we got that code, 19307, as well as three other procedures, including 38531, which had been in the proposed rule. The disappointment is that we provided CMS with data on 47 procedures and a fair amount of clinical data, including published research on, for instance, total shoulder and total ankle, which CMS did not choose to add to the ASC Covered Procedures List. So, the lack of, to your point, transparency has been a problem throughout the years. CMS has adopted a new process. It was originally called a nomination process, but one of the changes in the final rule was that CMS changed it, so it’s now called the “Pre-Proposed Rule CPL Recommendation Process.” I guess they weren’t going for brevity there. And they have also delayed the start of that process, which we are disappointed in. And I’m still going to call it the nomination process because it’s fewer words. But the new nomination process for codes is not set to begin now until the submission period, January 1, 2024, through March 1, 2024. So of course, that would be for consideration in the 2025 rulemaking cycle. So, still a couple of years out. We are planning on being more aggressive in 2023, taking board-certified surgeons in to meet with CMS medical officers, probably at least about total shoulder, maybe a couple of other procedures, if we have time to really get in front of them and explain why. Especially, like I said, total shoulder should be added to the ASC Covered Procedures List—it’s already being safely performed on patients in the ASC setting, including many at or near Medicare age, to your point, Bill.

Bill Prentice:   10:49
Yes, and you and I talked after the rule came out the other day about the fact that we also need to approach CMS leadership about this issue because they are, by being so conservative, the medical directors in terms of adding procedures to our list, they are really tying the hands of the program and losing the opportunity to save billions of dollars by having these procedures for appropriate Medicare beneficiaries migrate to our setting. And those billions of dollars obviously can be easily used by the program in other ways to improve access to care for the beneficiaries. So, I think the leadership of CMS, we’ve talked in the past but I think we got to keep hammering them on this. Particularly, Kara, because one of the things that we’ve seen in the last few rules is this idea of them looking through the lens of how a procedure can be performed on a typical Medicare beneficiary, which is, to my mind, a kind of a false standard to apply, when obviously the whole ASC model is based on the idea of the healthier patient, the appropriate patient, to receive care in our setting. Do you agree?

Kara Newbury:   11:57
Yes, Bill, I definitely agree with that. I do want to just take a minute because I don’t think I probably did a good enough job of explaining what this nomination process is. So, it’ll allow stakeholders, including ASCA and members of the public, folks at the facilities can submit their own codes through a portal on the CMS website with supporting information for why those procedures should be added to the list. And like I said, that, unfortunately, has been delayed until 2024 submissions for 2025 rulemaking. So, in the interim, we’re going to do what Bill and I talked about, going to CMS, going to leadership within the administration, and explaining to them how it benefits beneficiaries and the Medicare program to expand the code list.

Bill Prentice:   12:41
Great, and let’s move off of this kind of frustrating and disappointing topic and end on a positive note. Let’s talk about how the final rule provides for complexity adjustments for combinations of certain service codes and add-on procedure codes that are eligible then to receive a kind of a complexity adjustment in the hospital outpatient setting. Can you talk about how important this one is for ASCs and how we intend to develop more guidance on these codes in the future?

Kara Newbury:   13:08
Absolutely. So, there are procedure codes, and then there are codes which CMS has designated as add-on. And when they add something on like that, there is no separate reimbursement currently given and those are codes that have a payment indicator of N1. However, there are many cases when those N1 codes add significant cost and complexity to the primary surgical code that’s being performed. And so, for a while on the hospital outpatient side, CMS has recognized this and in certain cases allowed for a higher reimbursement when those add-on codes are included in the procedure. And CMS has finally, for 2023, aligned this policy and expanded it to the ASC setting. And so, there were 52 code combinations in the proposed rule and CMS has now identified 55 code combinations in the final rule for which they will apply this complexity adjustment. What they’ve done is they’ve given each of these code combinations a new code, a C code, and there is a table on the CMS website—we have a link that’s going in our resources, it’s in my slide deck for my webinar in early December—that will show you what the code combinations are. And because we know that this is a very new concept to the ASC setting and probably our billers and coders, we are going to provide further education both in terms of written materials in our Digital Debut or Focus magazine as well as, hopefully, at least a short webinar in the coming weeks and months to help our facilities with this because we, like I said, we do know that it’s kind of completely new for a lot of folks.

Bill Prentice:   14:57
Right. And we’re also hosting our Winter Seminar; we have a track for coders and billers and I’m sure we’ll be spending a lot of time talking about these issues there. So, if people are interested, they can go to the ASCA website to find out how to sign up for that conference in Las Vegas in early January. So, Kara, my last question, before I let you go, concerns the ASC Quality Reporting Program of what I consider to see another small victory for ASCs and for ASCA, at least for now, regarding an ophthalmic quality reporting measure that requires facilities to report on their patients’ visual function within 90 days following cataract surgery. And as listeners probably are aware, we have objected to having this quality reporting program requirement being made mandatory because surgery centers just don’t collect this kind of clinical data and it really didn’t belong in our program. So, the good news is that CMS has elected to suspend mandatory reporting of ASC-11, which had been slated to go into effect in 2025. Now, the less than good news is that this fight is not over, and we’ll have to continue raising our objections in future rulemaking to make sure this thing doesn’t pop back up again. So, Kara, what was the rationale given for suspension of this measure and do we know anything more about CMS’ thinking about why they believe this should be required of the surgery center rather than just at the physician level?

Kara Newbury:   16:15
Bill, you know that I sometimes am hesitant to try and get in the minds of those at CMS, but the rationale given in the proposed rule and also in the final rule for continuing the voluntary nature of this measure through at least 2025 is due to COVID and the continued burdens that our facilities face due to COVID. And, as we’ve discussed, I am uncomfortable with that rationale because this measure on its face is inappropriate for facilities. And CMS believes and continues to reiterate in the rule that facilities are equally responsible for the quality of care provided in ASCs as clinicians are, and that facilities have an obligation to ensure the best quality of care is provided by the clinicians they employ in their ASCs, which I agree with to a certain extent. But I think that CMS misses the concept of ASCs and the fact that our physicians are our owners as well, and the physicians are the ones directing that care in the facilities. So, there’s already the coordination of care that I think CMS strives for in a lot of other settings, it just exists by the nature of how our facilities are run. But to think that an ASC is going to be able to collect some of that data, that’s really collected at the physician office level, once the patient is done in the ASC is not true. And I think that this is another issue where, Bill, we’re talking past each other in our comments and in their responses, and we really need to get in front of the appropriate decision makers at CMS. Hopefully we, along with some of the other ophthalmic groups, including the ophthalmologists who were the ones who designed this measure to begin with and said that it was a clinician-level measure, not a facility-level measure, and really, hopefully convince the appropriate decision makers at CMS that this measure should not ever be made mandatory for the ASC setting. So, we continue to kick the can down the road and that’s great, but we still do fear that eventually CMS will want to mandate this for ASCs.

Bill Prentice:   18:27
Well, I know our members are gratified that we at least have succeeded in this rule in terms of delaying or in suspending that, and I’m sure you and your team will be working really hard, as you said, with other groups and other stakeholders, to try and convince them of why this doesn’t belong in our program. Well, Kara, as always, thank you for all the hard work that you put in throughout the year in terms of helping to kind of shape this rule and work with CMS, often a very frustrating exercise, to try and improve the Medicare program for both our members and obviously the patients that they see. So, thank you again for that.

Kara Newbury:   19:07
Of course. Thanks, Bill.

Bill Prentice:   19:08
So, once again, if anyone listening has additional questions, please don’t hesitate to contact us or visit the ASCA website with more details about the 2023 final payment rule. And we’ll have obviously more information as we sift through the rule and post it on our website. As Kara already mentioned, she’ll be doing a webinar in the coming weeks to go into greater detail about the provisions we’ve discussed and some others we probably didn’t have time to on this short podcast. And again, we’ll be talking a lot more about it at our Winter Seminar in January. So, whether you’re a coder or biller or you’re an administrator, there’s going to be a lot of education and good training sessions at that Winter Seminar, and so I hope everyone will come to Las Vegas and spend some time with us and learn more about this rule and a lot of other things that can help you run a better ASC. So finally, before signing off, I would like to once again thank our podcast sponsor, National Medical Billing Services, an ASCA affiliate and leading ASC revenue cycle company. To learn more about them, visit nationalascbilling.com.