Analysis of Medicare’s 2013 Payment Rule

November 2, 2012

The Centers for Medicare & Medicaid Services (CMS), yesterday, released the final rule that will govern ASC and hospital outpatient department (HOPD) payments in 2013. Key takeaways from the new payment plan follow.

0.6% Rate Update

In 2013, ASCs will see an effective update of 0.6%—a combination of a 1.4% inflation update based on CMS’s estimation of the change in Consumer Price Index for All Urban Consumers (CPI-U) and a productivity reduction mandated by the Affordable Care Act of 0.8 percentage points. This is worse than the 1.3% increase that had been proposed this summer due to the fact that CMS revised downward its estimation of the change in CPI-U.

Other factors, such as changes in the relative costs of procedures and changes in wage index values, will also affect what an individual ASC will be paid for a given procedure in 2013.

Gap Between ASC and HOPD Payments Widens

In 2013, CMS will continue two policies that drive ASC and HOPD rates apart: using different measures of inflation for the two systems and reducing ASC rates as compared to HOPD rates through the process of secondary rescaling.

In the final rule, despite acknowledging that “the CPI-U is highly weighted for housing and transportation and may not best reflect inflation in the cost of providing ASC services [and that] the items included in the hospital market basket seem reflective of the kinds of costs incurred by ASCs,” CMS declined to adopt the hospital market basket as the measure of inflation for ASCs. This means HOPDs will receive an update that is three times the ASC update.

This disparity is further exacerbated by CMS’ decision to continue to reduce ASC rates as compared to HOPD rates through secondary rescaling. For 2013, this process will reduce ASC rates by 6.7% in comparison to HOPD rates.

The continuation of these two policies will result in ASCs being paid 56% of what HOPDs are paid for the majority of procedures. ASCs will be paid closer to HOPD rates for procedures where ASCs are fully paid for devices (device-intensive procedures) and will be paid much less than HOPDs for procedures for which the ASC rates are based on the physician practice rates. ASCA has consistently argued for parity between the two payment systems.

CMS Continues to Consider ASC Cost Reporting

In the proposed rule, CMS solicited feedback on the feasibility of cost reporting for ASCs. In the final rule, CMS did not take any concrete steps toward establishing cost reporting and, instead, noted that it will take the comments that it received under advisement as it considers the matter further in future rule making.

No Change in Problematic Device Reimbursement Policies

Once again, CMS declined to adopt any changes that would result in ASCs being paid adequately for devices.

25 Additional Procedures Added

ASCs will be paid for an additional 25 procedures in 2013. This is an improvement over the 16 procedures that were proposed for addition and is due to CMS’ acceptance of some of the ASC communities’ suggestions of additional procedures that can be performed safely in ASCs.

View the list of new procedures.

Knee Replacement Procedure Not Removed from Inpatient Only List

CMS had proposed to remove CPT 27447 (total knee arthroplasty) from the inpatient only list for 2013, even though it did not plan to place the procedure on the list of ASC covered procedures. In the end, CMS did not remove this procedure from the inpatient only list and, thus, Medicare will continue to pay for the procedure only when it is provided in the inpatient setting.

No New Quality Measures Proposed

CMS did not propose any additional ASC quality measures for future years.

Click here to download a copy of the rule.

Additional resources that ASCA members can use to evaluate the impact of the new payment rules on their centers, including a 2013 update to ASCA’s rate calculator, will be available on ASCA’s web site next week.