Retina in the ASC

Challenges and opportunities under the new ASC payment system

PRAVIN U. DUGEL, MD · MICHAEL A. ROMANSKY, JD

The authors have been advocates of the ambulatory surgery system for years — Dr. Dugel as a retina specialist who has performed surgery in the ASC for almost 2 decades and Mr. Romansky as lawyer and lobbyist for the Outpatient Ophthalmic Surgery Society (OOSS) since 1983. Over the years, we have sought legislative and regulatory change that would expand the access of our nation's elderly to the high-quality, cost-effective, and patient-friendly care provided by the ASC. Until 2008, few retinal surgeons practiced in the ASC because payment rates barely allowed even the efficient practitioner to cover costs with meager Medicare facility fees. Under the new ASC payment system launched January 1, 2008, facility fees for most ophthalmic services will gradually increase and payment for vitreoretinal services will virtually double over the next few years (see Table). By putting the patient's interests first — always and unequivocally — OOSS, other pioneers in the ASC industry, and, now, many of us in the retina community have the opportunity to create a win/win/win situation, so to speak, for the Medicare beneficiary, the payer, and the physician.

THE PROMISE OF THE NEW ASC PAYMENT SYSTEM

We will outline briefly below the challenges we face in the nation's capital as we inaugurate a new administration and a new Congress with near filibuster-proof Democratic majorities. You will see that the ophthalmic ASC community's agenda is, as always, expansive. It is proactive. It is aggressive. And its success will depend, not just on the work of your lobbyists and of the OOSS leadership, but upon our willingness, as retina surgeons, to lend a hand — to participate by considering joining OOSS and sending a few emails to your representatives and senators. This modest investment can yield generous dividends — higher ASC facility payments, more procedures eligible for reimbursement, more reasonable Medicare survey requirements, the preservation of your right to own an ASC, and better care for the Medicare beneficiary.

We will not recount here the efforts undertaken over the past decade to ensure that CMS developed and implemented a new ASC payment system, except to say that, for the most part, we are pleased with the program that was launched on January 1, 2008. As OOSS and the ASC community had recommended, the new system links ASC payments to those made to hospital outpatient departments (HOPD) for the same services. As noted above, over the next few years, cataract payments should increase modestly, and reimbursement for vitreoretinal surgery will rise dramatically. We are scheduled, for the first time, to receive annual cost-of-living adjustments. And, as urged by the ophthalmology community for years, a significantly expanded ASC list ensures that virtually every ophthalmic surgical procedure can be performed in the ASC and reimbursed.

IMPROVING THE NEW ASC PAYMENT SYSTEM – AND PRESERVING OUR GAINS

Lest we get too enthused with the new payment program, we must be cognizant of the reality that, in the recently promulgated 2009 update to the Medicare ASC rates, CMS has embraced several policies that will arbitrarily reduce payments to ophthalmic ASCs and exacerbate, rather than narrow, the gap between payment rates paid to ASCs and HOPDs. Here are a few examples:

■ Budget Neutrality Reductions. CMS has applied 2 (rather than 1) budget neutrality adjustments to ASC rates. This "rescaling" of rates has the effect of reducing ASC payment rates from about 63% of what hospitals receive to about 59%. With respect to CPT 66984, cataract, the highest-volume Medicare procedure, hospital median costs increased by 3.18%; with the second adjustment, actual ASC payments for the procedure will be reduced by 1.52%. OOSS and others have emphasized that CMS is not required to rescale rates and that rescaling has the perverse effect of widening the gap in payments made to hospitals and ASCs.

■ Annual Updates. In 2010, ASCs are scheduled to receive their first annual update since 2004. CMS continues to insist upon using the Consumer Price Index–Urban (CPI-U) to adjust ASC rates for inflation, rather than the Hospital Market Basket, which is typically about a point higher. Using the higher index makes sense because ASCs are treating the same patients with the same conditions — inflationary increases in costs of capital, staff, and overhead should be commensurate.

■ Cap on Payment for Office-Type Surgical Services. The ASC community continues to fight to reverse CMS' policy of designating some surgical procedures as "office-based" and capping payments for such services at the amount the physician would receive under the nonfacility practice component of the Medicare Professional Fee Schedule. These services, such as laser photocoagulation and cryotherapy, should be subject to the same payment methodology as all other covered procedures.

■ Implantable Devices. As discussed above, facility payments for many vitreoretinal services will increase significantly — over time! The new rates are phased in over a 4-year period (we have just entered year 2), and, because the new payment system bundles a procedure's facility fee with sometimes costly implantable devices that used to be separately reimbursed, payment rates for some glaucoma and retina procedures have actually dropped below 2008 levels. For example, glaucoma patients with a failed trabeculectomy procedure may require an aqueous shunt; however, the ASCs costs for facility overhead and device exceed the bundled Medicare allowance by $200 to $300.

Similarly, in retina, the repair of the complicated retinal detachment may require perfluoro-octane or silicone oil. Neither of these costly items is separately reimbursed under the current regulations. OOSS has argued that this financial disincentive penalizes the more efficient ASC, where these procedures have been appropriately furnished for years and forces the migration of these procedures to the more costly hospital outpatient department.

BEING VIGILANT IN ANTICIPATING AND RESPONDING TO THE UNEXPECTED

As discussed above, after a 5-year freeze on ASC facility fees, ASCs are scheduled in 2010 to receive an inflation adjustment. We thought that our biggest battle would be persuading CMS to provide us with the higher Hospital Market Basket adjustment afforded hospitals. We did not expect that the Medicare Payment Advisory Commission (MedPAC) would consider recommending to Congress that ASCs receive no annual update to payment rates in 2010.

How could such a policy be considered when ASCs haven't received an inflation update in 5 years? The staff reported that Medicare spending on ASC services on a per beneficiary basis grew by an average of 8.4% per year between 2002 and 2007 and that aggregate Medicare expenditures for ASC services will increase from $2.9 billion in 2007 to $3.9 billion in 2009. Staff also cited expansion in the ASC market (approximately 250 new facilities become certified each year) and strong growth in the publicly traded companies as reflective of a robust industry that is very profitable and not in need of an update.

In a meeting with MedPAC, representatives of the ophthalmology community vehemently objected to the staff's suggestion that an inflation update should not be provided in 2010, citing that: (1) ASCs have not enjoyed an update in 5 years; (2) ASC industry growth and revenue statistics are not a proxy for ASC profitability or the need for an inflation adjustment; (3) ASCs should be rewarded, not penalized, for their efficiency and productivity; and 4) these payment issues should be addressed in a comprehensive manner after the new ASC payment system has been fully phased in and not in midtransition.

At MedPAC's January 2009 meeting, we secured an important partial victory. The commission agreed to recommend to Congress that ASC payment rates be updated in 2010 by 0.6% (which equals the CPI-U minus productivity adjustment that MedPAC is recommending be applied against most providers' rates). In a very positive development, the commission directed its staff to report again in June 2009 regarding an appropriate index for updating ASC rates, and it held open the possibility that a higher index might be applied to ASC rates as early as 2010.

OTHER ISSUES ON THE HORIZON

■ Physician Ownership of ASCs. For over a decade, ASCs have enjoyed privileged status among health care providers under federal self-referral laws. ASCs are exempt from the Stark statute and can avail themselves of safe harbor protection from the federal antikickback laws for many common ownership structures. For the most part, at the federal level, surgery centers have not been the focus of the physician ownership debate during the past few years. There are, however, some ominous clouds on the horizon. Congress may once again focus on physician ownership of specialty hospitals — like cardiac and orthopedic institutions — which always augments the visibility of surgeon ownership in ASCs. At the state government levels, the hospital industry is seeking imposition of a plethora of impediments to ASC development, including restrictions on ownership; more rigorous licensure and certificate-of-need laws; and provider taxes on ASCs, to name just a few. Regrettably, we will need to devote resources in the coming year to beating back the anticompetitive antics of the hospital lobby at the levels of state and local government.

■ Flash Sterilization. Early in 2008, a handful of Medicare surveyors — state health departments and private accreditation entities such as the Joint Commission on Accreditation of Hospitals — expressed concerns about ophthalmic ASCs' routine use of flash sterilization for infection control. Because many ophthalmic ASCs are 15 to 20 years old, retrofitting the physical plant to accommodate a prevac sterilizer may be impossible or prohibitively expensive, as would be the capital expense associated with the acquisition of expanded instrument and handpiece inventory and sterilizing equipment. OOSS is part of a joint task force with the ASCRS and the AAO that will be providing survey agencies with relevant information regarding contemporary cleaning and processing of instruments, ASC sterilization practices, and the incidence of toxic anterior-segment syndrome, endophthalmitis, and other ophthalmic infections in our facilities.

■ Retinal Coding and Reimbursement. Reimbursement changes in the payment for ASCs have resulted in coding changes for vitreoretinal services. The most significant change is the bundling of the membrane stripping code. The changes in vitreoretinal coding issued on October 1, 2008, are mutually exclusive codes. If they are billed together, CMS will only pay for the lowest paying code. The recent Correct Coding Initiative edits have bundled the vitrectomy with laser surgical codes (67039, 67040) with the vitrectomy/macular pucker (67041) and vitrectomy/ILM peel (67042) codes. This means that if a vitrectomy is done for a macular pucker or a macular hole and a focal or panretinal photocoagulation is done for 1 or more retinal tears, or if a vitrectomy is done for a diabetic patient with significant fibrosis that requires a vitrectomy with membrane peeling and panretinal photocoagulation, both the laser and membrane peeling (with or without ILM peeling) cannot be charged. Only the vitrectomy with laser photocoagulation code can be charged as the membrane stripping has now been bundled. This is regardless of the extent or complexity of the additional uncharged procedure. If both codes are charged, either deliberately or inadvertently, only the lowest paying code will be reimbursed.

WHAT IS THE RETINAL SPECIALIST TO DO?

As retinal surgeons, we will encounter myriad challenges from Washington. Like all of medicine, we face the prospects of negative updates with respect to our professional fees. The government is proposing to substantially increase our responsibilities to move to electronic record keeping and prescribing. The Medicare ASC program is a bright light on a gray horizon — a program that provides financial incentives to provide high-quality and cost-effective care to the nation's elderly. Whether you, as a retinal specialist, are operating in an ASC or in an HOPD, it is imperative that you have the flexibility to avail your-selves of options in site of surgery in the years ahead. OOSS, the broader ophthalmology community, and the ASC industry will embark upon an aggressive agenda in 2009: to develop federal legislation that will correct some of the above mentioned deficiencies in the new ASC payment program; to ameliorate potential cutbacks in ASC payments; and to preserve the ability of surgeons to own and refer their patients to surgery centers.

What can you do? Consider joining the Outpatient Ophthalmic Surgery Society, a phenomenal organization that is welcoming the retinal surgeon to its ranks (www.OOSS.org). Be prepared to devote a couple of hours in 2009 to educating your elected officials in Washington about your concerns, including ASC issues. Consider contributing to the political action committees of the AAO, ASRS and OOSS. RP