MEDICARE AMBULATORY SURGICAL CENTER PAYMENT SYSTEM 2009 PROPOSED RULE SUMMARY

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1 MEDICARE AMBULATORY SURGICAL CENTER PAYMENT SYSTEM 2009 PROPOSED RULE SUMMARY On July 3, 2008, the Centers for Medicare and Medicaid Services (CMS) issued the HOPPS/ASC proposed rule with comment period that includes the annual update of the revised ambulatory surgical center (ASC) payment system for calendar year There is a 60-day comment period. Comments must be submitted to CMS by September 2, The final rule will be published by November 1 st, with an effective date of January 1, The new ASC Prospective System aligns ASC rates with the ambulatory payment classification (APC) groups that are used to pay for services in hospital outpatient departments. Since January 1, 2008, ASCs have been paid under a revised ASC payment system. The 2009 ASC payment system will be in the second year of a four-year transition. CMS expects to make payments of $3.9 billion to approximately 5,300 ASCs in Covered Surgical Procedures A. Background The August 2, 2007 final rule established policies for determining which procedures are ASC covered surgical procedures and covered ancillary services. Covered surgical procedures are surgical procedures that are separately paid under the hospital outpatient prospective payment system (HOPPS), that would not be expected to pose a significant risk to beneficiary safety when performed in an ASC, and that would not be expected to require an overnight stay. CMS defines surgical procedures as those procedures described by Category I CPT codes in the surgical range of through 69999, as well as those Category III CPT codes and Level II HCPCS codes that crosswalk or are clinically similar to ASC covered surgical procedures. CMS provides payment under the revised ASC payment system for surgical procedures that are currently performed predominantly in physicians offices and that may be safely performed in ASCs, without requiring an overnight stay. Under the revised ASC payment system, officebased surgical payments are limited to the lesser of the Medicare Physician Fee Schedule (MPFS) non-facility practice expense payment or the ASC rate. For device-intensive procedures, where device costs account for 50% or more of the total cost of the service, ASCs receive the same payment for the device cost as would be made under HOPPS. B. Additions to the List of ASC Covered Surgical Procedures CMS is proposing to add nine (9) procedures to the ASC covered procedures list effective January 1, Three of the 9 procedures are new Category III codes that became effective July 1, 2008 and are subject to comment through this proposed rule. The other 6 procedures were previously excluded from the list in 2008 (see table below). Copyright Health Policy Solutions 1 7/10/2008

2 HCPCS New ASC Covered Surgical Procedures for Nasal/sinus endoscopy, surgical G Thrombectomy; axillary and subclavian vein, by arm incision G Exchange transfusion, blood; other than newborn G Laparoscopy; with drainage of lymphocele to peritoneal cavity G Laparoscopy; with revision of previously placed intraperitoneal cannula G2 or catheter, with removal of intraluminal obstructive material if performed Laparoscopy; with omentopexy G2 0190T Placement of intraocular radiation source applicator G2 0191T Insert of anterior segment aqueous drainage device; internal approach G2 0192T Insert of anterior segment aqueous drainage device; external approach G2 G2=Non office-based surgical procedure added in CY 2008 or later; payment based on HOPPS relative payment weight C. Changes to Covered Surgical Procedures Designated as Office-Based CMS is proposing to add five (5) procedures to the list of office-based procedures (subject to payment at the lesser of the office practice expense payment to the physician or the standard ASC rate). (See table below.) HCPCS 2009 New Designations of ASC Office-Based Procedures 2008 ASC 0084T Insertion of temporary prostatic urethral stent G2 R2* Therapeutic apheresis; adsorption and reinfusion G2 P Therapeutic apheresis; selective G2 P Removal of corneal epithelium; with application of chelating G2 P3 agent Retrobulbar injection; alcohol G2 P3 *Denotes temporary payment indicator R2= Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS P2= P3=Office-based surgical procedure added to ASC list in CY 2008 or later with MPFS P3= Office-based surgical procedure added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs In addition, CMS reviewed 2007 utilization information for the seven (7) procedures with temporary office-based designation for Of those procedures, CMS proposes to make permanent the office-based designation for CPT CMS is not proposing to make permanent the office-based designation for the 6 other procedures identified as temporary in 2008, as they do not believe that the currently available utilization data provides adequate information (see table below). Copyright Health Policy Solutions 2 7/10/2008

3 HCPCS 2008 Office-Based Procedures for Which the 2009 Designation is Temporarily Office-Based 0099T Implant corneal ring R2* 0124T Conjunctival drug placement R2* Mnpj of tmj w/anesth P3* Placement of interstitial device(s) for radiation therapy guidance (eg, fiducial markers, dosimeter), prostate (via needle, any approach), single or multiple Tr retinal les preterm inf R2* Probe nl duct w/balloon P3* C9728 Placement of interstitial device(s) for radiation therapy/surgery guidance (eg, fiducial markers, dosimeter), other than prostate (any approach), single or multiple R2* *Denotes temporary office-based payment indicator R2= Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS P3= Office-based surgical procedure added to ASC list in CY 2008 or later with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs Further, CMS determined that it would be consistent for the office-based assignment of HCPCS code C9728 to be temporary. This procedure is paid under the 2008 ASC payment system as an office-based procedure but is analogous to CPT 55876, for which CMS proposes to maintain the temporary office-based payment indicator for Therefore, CMS is also proposing to assign a temporary office-based payment indicator to HCPCS code C9728 for D. Changes to List of Covered Surgical Procedures Designated as Device-Intensive for 2009 CMS proposes to update the list of device-intensive procedures, which reflects changes to the 2009 device offsets (see Table 41 on pages ). P3* Covered Ancillary Services A. Background The August 2, 2007 final rule established a policy to make separate ASC payments for the following ancillary services, for which separate payment is made under the HOPPS, when they are provided integral to ASC covered surgical procedures: brachytherapy sources; certain radiology services; certain drugs and biologicals; certain implantable items that have passthrough status under HOPPS; and certain items and services that CMS designates as contractpriced, including, but not limited to, procurement of corneal tissue. for ancillary services that are not paid separately under the ASC payment system are packaged into the ASC payment for the covered surgical procedure. ASC payments for the covered ancillary procedures is the lower of: (1) the amount calculated according to the standard methodology of the revised ASC payment system; or (2) the Medicare Physician Fee Schedule (MPFS) non-facility practice expense relative value unit (PE RVU) amount for the service (specifically for the technical component (TC) if the service s HCPCS code is assigned a TC under the MPFS). Copyright Health Policy Solutions 3 7/10/2008

4 B. Changes to List of Covered Ancillary Services CMS proposes to update the ASC list of covered ancillary services to reflect the services proposed separate payment status under the 2009 HOPPS. Maintaining consistency with HOPPS may result in proposed changes to the ASC payment indicators because some covered ancillary services that are paid separate under the revised ASC payment system in 2008 are proposed for packaged status under the HOPPS for Comment indicator CH used in Addendum BB indicates a change to the covered ancillary service. ASC for Covered Surgical Procedures CMS proposes to update 2009 payment rates for procedures with payment indicator G2 according to the standard methodology of multiplying the proposed 2009 relative payment weight for the procedure by the proposed conversion factor. CMS proposes 2009 payments for procedures subject to transitional payment methodology (payment indicators A2 and H8 ) using a blend of 50% of the proposed rate calculated according to the standard or device-intensive methodology, respectively, and 50% of the 2007 ASC payment rate. CMS is proposing to update payment rates for office-based procedures (payment indicators P2, P3, and R2 ) based on the 2009 HOPPS proposed rule that makes payment for officebased procedures at the lesser of the proposed 2009 MPFS nonfacility PE RVU or the 2009 ASC payment amount calculated according to the standard methodology. Similarly, CMS proposes to update ASC payment rates for the device-intensive procedures (payment indicators J8 and H8 ) based on the 2009 HOPPS proposal that reflects updated claims data and proposed updated 2009 HOPPS device offsets (see Table 41 on pages ). Adjustment to ASC for Partial or Full Device Credits Consistent with HOPPS, CMS proposes to update the list of device-intensive procedures that would be subject to the full and partial credit payment policies for 2009 (see Table 42 on pages ). CMS will not apply the partial or full device credit policy to procedures and devices associated with APC 648 Level IV Breast Surgery (i.e., procedures 19296, and and device C1728 brachytherapy catheter), which is proposed for inclusion in the HOPPS full and partial credit payment reduction policy for 2009, because ASC covered procedures assigned to these two APCs under HOPPS do not qualify for payment as ASC covered deviceintensive surgical procedures (that is, their estimated device offset percentages are less than 50%). ASC for Covered Ancillary Services For 2009, CMS proposes to update the ASC payment rates and make changes to payment indicators as necessary in order to maintain alignment between the HOPPS and ASC payment systems regarding the packaged or separately payable status of services. Copyright Health Policy Solutions 4 7/10/2008

5 ASC payments for the covered ancillary procedures is the lower of: (1) the amount calculated according to the standard methodology of the revised ASC payment system; or (2) the Medicare Physician Fee Schedule (MPFS) non-facility PE RVU amount for the service. The proposed 2009 payment rate for radiology services is based on the MPFS PE RVU amount or the standard ASC payment calculation. Thus, the proposed 2009 payment indicator for a covered radiology service may differ from its 2008 payment indicator based on packaging changes under HOPPS or the comparison of the 2009 proposed MPFS nonfacility PE RVU amount to the payment rate calculated according to the standard methodology. Services that CMS is proposing to pay based on the standard ASC rate methodology are assigned payment indicator Z2 Radiology service paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS relative payment weight. Services that CMS is proposing to pay based on the MPFS PE RVU amount are assigned payment indicator Z3 Radiology service paid separately when provided integral to a surgical procedure on ASC list; payment based on MPFS non-facility PE RVUs. Brachytherapy sources applied in the ASCs are paid at the same prospectively set rates as the 2009 HOPPS rates, unless Congress specifies another payment methodology. Calculation of ASC Conversion Factor and ASC Rates For 2009, CMS compared the total payment weight using the 2008 ASC relative payment weights under the 75/25 blend with the total payment weight using the relative payment weights under the 50/50 blend. The ratio of the 2008 and 2009 total payment weight (the weight scaler) is used to scale the ASC relative payment weights for The proposed 2009 scaler is Scaling of ASC relative payment weights applies to covered surgical procedures and ancillary radiology services. The scaling adjustment does not apply to brachytherapy sources For the 2009, CMS is proposing to calculate and apply the pre-floor and pre-reclassified hospital wage index that is used for ASC payment adjustment to the ASC conversion factor. The resulting ratio is Therefore, CMS is proposing to update the ASC conversion factor with the budget neutrality adjustment resulting in a conversion factor of $ ($ multiplied by ). The law does not allow for an inflation update to the ASC payment system for CMS will implement the annual updates through an adjustment to the conversion factor beginning in 2010 when the statutory requirement for a zero update no longer applies. Copyright Health Policy Solutions 5 7/10/2008