Home E-Weekly April 22, 2014

OIG Report Details How Medicare Could Save Billions More From ASCs

Published: April 21, 2014

Medicare already saves billions of dollars when procedures are performed in ambulatory surgery centers instead of hospitals, but a new report says Medicare would save billions more if outpatient payment rates for most ASC-approved procedures were reduced to ASC levels.

Medicare saved nearly $7 billion between 2007 and 2011 and would save another $12 billion from 2012 to 2017 when procedures were performed on low-risk patients with low-risk clinical needs in ASCs instead of HOPDs, according to a report issued by the Office of the Inspector General. The OIG says Medicare could save an additional $15 billion during the same 5-year period if HOPD payment rates were reduced to current ASC rates. Medicare pays ASCs about 47% less for the same procedures.

Changing the payment differential would demand legislation that does away with the budget neutrality of the payment system mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Under the current system, notes the OIG, lowered rates for some procedures would result in higher rates for others. The OIG recommends that CMS seek legislation that would exempt reduced expenditures resulting from lower HOPD payments from budget neutrality, and calls for a payment strategy that would continue to reimburse HOPDs higher rates for procedures performed on high-risk patients who should be cared for in hospitals.

CMS does not agree with the OIG's recommendations, however, and states the budget-neutrality exemption is not included in President Obama's current budget. Making such changes would raise concerns about future rate calculations, adds CMS, because ASC payments are based on what HOPDs are paid. CMS also points out that the OIG did not provide clinical criteria to distinguish patients' risk levels.

The idea of site-neutral payments has value and makes sense, says David Shapiro, MD, CASC, immediate past president of the Ambulatory Surgery Center Association. "There really is no underlying good reason for payment discrepancy between settings that provide essentially similar services to the same population of patients," he says.

But Dr. Shapiro says basing a solution on rates that are inadequate for many procedures is a "non-starter" that might result in patients not having access to important services. He also questions the practicality of establishing clinical guidelines for identifying higher-risk patients who should undergo surgery at HOPDs.

"The devil's in the details," he explains. "How do you determine risk for a given patient undergoing a given procedure on a given day? That's possible to consider, but also very hard to implement fairly and appropriately."

Daniel Cook

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