THE NEW ASC PAYMENT SYSTEM:

1

• THE NEW ASC PAYMENT SYSTEM
• MYTH AND REALITY
• Michael A. Romansky, JD
• Washington Counsel, OOSS
• mromansky_at_OOSS.org
• [phone]

2
Todays Agenda

• Update on ASC Payment Reform
• Final ASC Rule Where We Won and Where Our
  Work Isnt Completed
• Proposed Medicare ASC Conditions for Coverage
• Physician Investment in ASCs

3
Getting the Job Done

• Leadership commitment
• Professional lobbying
• Sound data-driven policy positions
• Be willing to legislate!
• Grassroots developing relationships with
  policy-makers
• Alliances Keeping your friends close and your
  enemies closer
• Political action -- OOSPAC

4
Realities of the Past Legislative Mandates

• 2007 cuts in 66810, 66821, 67141, 66625
• No ASC annual updates for 2004-9
• CMS must adopt new prospective payment system by
  January 1, 2008

5
New Payment System Options

• Status Quo
• CMS conducts new ASC cost survey
• CMS links ASC rates to HOPD payments

6
Rebasing via Crosswalk What We Like

• Hospital data better than ASCs
• More likely for ASCs to receive annual updates
• Joint lobbying by hospital and ASC industries
• Hospitals enjoy add-ons, e.g. drug/device
  pass-throughs
• Broader list of covered procedures
• Cataract diluted as target for cuts

7
GOAL 1 -- Getting Rid of the ASC List and
Getting Paid for all Ophthalmic Services

• MedPAC 2004 Report -- After ASC rebasing, current
  list of procedures should be replaced with list
  of services which, based on clinical safety
  standards, should NOT be covered

8
Coverage of Services ASC List

• Industry Position
• Exclusive list
• Updated annually
• Everything except (1)overnight stay and (2)
  unsafe in ASC
• Use inpatient only list Update annually

9
Coverage of Services ASC List

• Final Rule
• Exclusive list
• Updated annually
• High-intensity services -- includes virtually
  all ophthalmic codes (w/ RV services up 40)
• Future Services subject to restrictive criteria
• Inpatient only list
• No overnight stay
• Safety risk invasion of body cavities,
  extensive blood loss, emergent or
  life-threatening

10
Coverage of Services ASC List

• CMS Rule
• Office-type procedures 500 added, incl. most
  ophthalmic codes
• Payment ASC paid at lower of
• 65 percent of HOPD, or
• Practice expense component of MFS
• OOSS/Industry Position
• Full ASC conversion factor (75, 65, whatever)
  should apply to all services regardless of
  setting

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• GOAL 2 GETTING
• PAID FAIR AND EQUITABLE RATES

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Payment for ASC Services

• Classification System
• Industry use APC system utilized in HOPD
  (approx. 100 surgical categories
• CMS Rule same

13
Payment for ASC Services

• Industry
• Commencing 1/1/08, CMS pay ASCs 75 of rate paid
  to HOPDs
• CMS Rule
• Commencing 1/1/08, CMS pay ASCs 65 of rate paid
  to HOPDs

14
Payment for ASC Services

• Why 65
• Not based on real relative costs of providing
  services in HOPD vs. ASC
• COLA freeze has dropped percentage each year
• Calculations tied to meeting MMA requirement for
  budget neutrality, i.e., same expenditures in
  2008 as 2007
• Faulty assumptions about migration of services
  between HOPD and ASC

15
Impact of Rule by Specialty
16
Payment for ASC Services

• Industry response
• CMS must use more flexible BN approach, i.e.
  larger total ambulatory surgery pool
• Challenge migration assumptions
• Legislate if necessary (HR 1823) and it is
  necessary!
• EACH PERCENTAGE POINT ADDED IS
• 30 MILLION FOR ASCs

17
Payment for ASC Services

• Recalibration of Relative Weights
• Industry Annual recalculation of weights
• CMS Rule Annual recalculation of weights

18
Payment for ASC Services

• ASC Annual Updates
• Industry Position -- Every year, ASCs should
  receive hospital market basket (approx. 4)
• CMS Rule Starting in 2010, ASCs receive
  Consumer Price Index-Urban (approx. 3)

19
Payment for ASC Services

• Office Based Payment Limitation
• If performed 50 of time in office, ASC receives
  lesser of 65 of HOPD or MFS practice expense
  amount.
• Doesnt change MD payment
• Limit doesnt apply to HOPDs

20
Payment for ASC Services

• Payments for Innovative Drugs and Devices
• Industry Position ASCs should receive same
  pass-through payments as HOPDs
• CMS Proposal No
• CMS Final Rule Yes

21
Payment for ASC Services

• Device-Intensive Procedures
• Procedures for which device costs exceed 50 of
  facility fee (approx. 40 such procedures)
• Relief ASC receives 65 of facility fee 100
  of the device component
• No immediate impact on ophthalmology, but
  important precedent

22
Payment for ASC Services

• Payments for Less Costly Implantable Devices
• Final CMS Rule No special relief
• Transition formula results in actual decreases in
  payments for ophthalmic services with implants,
  e.g. 66180 (aqueous shunt to extraocular
  reservoir), 65105 (enucleation of eye, w/
  implant) 65155 (reinsertion of ocular implant)
• OOSS Position CMS should provide full payments
  for implants during transition

23
Payment for ASC Services

• New Technology IOL
• CMS provides 50 bonus to ASC for implant of
  NTIOL
• Currently applies to AMO Array, Starr Toric, AMO
  Tecnis, and Alcon Acrysoft
• CMS Rule
• Modifies application/review/approval process
• Proposes change in review standards

24
Payment for ASC Services

• Corneal Tissue
• CMS Rule Continues current policy of paying for
  corneal tissue based on invoiced costs

25
Payment for ASC Services

• Transition to New Payment System
• Proposal 2 years
• Final Rule 4 years
• Impact on ophthalmic services

26
Payment for ASC Services

• Beneficiary Co-payments
• Industry New payment system should maintain
  current patient cost-sharing requirements, i.e.
  20 of Medicare payment
• Contrast with HOPD 20 of hospitals charges,
  meaning beneficiarys out-of-pocket is 20-40 of
  facility fee
• CMS Rule Same as industry

27
Getting from 65 to 75 Percent How Do We Want the
Proposed Rule Changed?

• More flexible view of budget neutrality
• ASC rates at gt 65 of HOPD rates
• Annual updates at hospital market basket, like
  HOPD
• Larger ASC list --with physicians, not CMS,
  making decisions as to site of surgery
• Full reimbursement at ASC rates for office-type
  procedures

28
Getting from 65 75 Percent How Do We Want the
Proposed Rule Changed?

• Oppose dilution of percentage to provide special
  relief for other specialties, e.g., GI, pain
  management
• Transition relief for procedures involving
  implantable devices

29
HOW DO WE GET THIS DONE?

• Ask your Senators and Representatives to
  cosponsor HR 1823
• Alert them that the ASC industry objects to the
  proposed ASC payment system
• HOW TO DO IT Go to the ASC Advocacy Center
• www.OOSS.org

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HOW DO WE GET THIS DONE?

• Political Action Its not a four-letter word!
• Join the Outpatient Ophthalmic Surgery
  Political Action Committee
• OOSPAC

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HOW DO WE GET THIS DONE?

• If you are not a member of OOSS, join NOW.
• If you are a member, join the OOSS Presidents
  Council.

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PROPOSED MEDICARE ASC CONDITIONS OF COVERAGE

• CMS has proposed first revision in 25 years to
  ASC conditions of coverage (CfC)
• New responsibilities and restrictions
• No planned overnight stays
• More responsibilities for governing body and
  management
• Quality assessment and performance improvement
  standards

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PROPOSED MEDICARE ASC CONDITIONS OF COVERAGE

• New responsibilities and restrictions(cont.)
• Patient rights
• Infection control
• Patient admission, assessment, discharge

34
PHYSICIAN INVESTMENT IN ASCs

• Hospital industrys niche providers campaign,
  e.g., specialty and surgical hospitals
• ASCs enjoy federal safe harbor protection
• Hospital industry attacks on ASCs at state level
• Limits on self-referral
• Tougher CON and licensure restrictions
• Provider taxes

35
OUR BIGGEST AGENDA EVERWHAT IS OOSS DOING FOR
YOU

• Your lobbyist, Mike Romansky, is full-time with
  OOSS
• Developing meaningful and credible federal ASC
  policy
• Developing data
• Lobbying the Congress
• Lobbying the regulators CMS, MedPAC, GAO, CBO,
  OIG

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OUR BIGGEST AGENDA EVERWHAT IS OOSS DOING FOR
YOU

• Mobilizing the ASC industry
• Providing you with user-friendly material for
  your comments to CMS and communications with
  legislators
• Visit the OOSS Advocacy Center at
  www.OOSS.org
• Political action