The Centers for Medicare & Medicaid Services’ 2021 Proposed Payment Rule (August 10, 2020)




ASCA Chief Executive Officer Bill Prentice is joined by ASCA’s Regulatory Counsel and Director of Government Affairs Kara Newbury for a discussion about the 2021 proposed Medicare payment rule released by the Centers for Medicare & Medicaid Services (CMS) on August 4, 2020. The proposal, which will be finalized this fall following comments by interested parties, sets Medicare reimbursement levels and quality reporting requirements for procedures performed in ASCs in the coming year.

Narrator: 0:06
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Bill Prentice: 0:37
Hi, I'm Bill Prentice and I’m ASCA’s CEO and host of this episode. On this podcast, I'm pleased to welcome back Kara Newbury, ASCA’s regulatory counsel and director of Government Affairs, and I've invited Kara on today to discuss the proposed 2021 ambulatory payment quality reporting rule that was released by the Centers for Medicare & Medicaid Services, or CMS, earlier this week on August 4. As many of you know, CMS is required by law to issue a rule each year to set reimbursement amounts, define quality reporting requirements, add or remove procedure codes and more for Medicare services performed in ambulatory surgery centers in the coming year. They do this for other providers as well. The drafting of this rule and soliciting ideas from interested parties is actually a process that goes on at CMS throughout the year, and ASCA also interacts with CMS staff throughout the year to advocate for the interests of ASCs and the patients we serve. And we see much of that advocacy represented in the payment rule each year. Historically, there's always been parts of the proposed rule that we expected and parts that tend to surprise us and this year is no different. On balance, however, it seems like this proposed rule demonstrates a pretty clear understanding and appreciation of the safety and quality and value that ASCs provide and we're appreciative of that. One positive thread running through this proposed rule is that physician decision-making seems to be identified as the best arbiter for determining the best setting for beneficiary care. We know that greater use of ASCs by patients could save the Medicare program billions of dollars, so we're always good to see that. I'd also be remiss of me not to acknowledge all the hard work that Administrator Verma and the staff at CMS have done this year in meeting the extraordinary challenges of the COVID-19 pandemic and working with the ASC community to assure that patients can still get the care that they require, so we thank Administrator Verma for that. That said, there are things that we are disappointed about not seeing in this proposal and Kara and I will be talking about that shortly. So with that introduction, I'd like to welcome Kara Newbury back to the Advancing Surgical Care Podcast. Welcome, Kara.

Kara Newbury: 2:47
Thanks, Bill. Good to be here.

Bill Prentice: 2:49
Kara, there always is a lot to unpack when we look at these draft rules and how many pages was this year's rule?

Kara Newbury: 2:56
785 pages, so actually slightly shorter than normal.

Bill Prentice: 3:00
So, it was a proposed rule on a diet this year. Well, we know when these draft rules are released, the first thing that most ASCs are interested in learning is how we fared in terms of the inflation adjustment for our Medicare payments. So, what is CMS proposing as an adjustment and how does that compare to prior years?

Kara Newbury: 3:19
Right. Thanks, Bill. So, CMS is proposing a 2.6 percent effective update. Now that's the same update that is being proposed for both ASCs and hospital outpatient departments, and it is exactly what was finalized for 2020 payments. As you probably recall, ASCs used to be updated based on the Consumer Price Index for All Urban Consumers, but ASCA and others within the ASC community were successful in getting CMS to align our update factor with hospital outpatient departments for at least a five-year trial period. This is especially important right now, as the Consumer Price Index for All Urban Consumers is based on consumer behavior. And as we know, during the middle of a global pandemic, consumer behavior has been skewed. So, we're proposed, as I said, to be at a 2.6 percent effective update. As the listeners probably are well aware, this can vary significantly by not only specialty but even specific code, so there are some procedures and some specialty areas that will not see as big of an increase, unfortunately.

Bill Prentice: 4:35
And also very important to note, this still is only the proposed rule and there is always the possibility that this rate could change between now and the final rule adoption later this year.

Kara Newbury: 4:49
That is correct.

Bill Prentice: 4:50
Alright, well, let's now move and talk about the proposed list of new procedure codes. And as many of our listeners know, advocacy by ASCA to expand that list occurs every year. And, you know, year long we're usually trying to bring in data and clinical studies and medical experts to CMS to demonstrate our ability to safely and efficiently perform a wider range of surgeries and procedures than are currently approved for reimbursement by Medicare. One of the things that our listeners are obviously very well aware of is that they're generally allowed to do more things on the commercial patient than they are on the Medicare beneficiary. However, we know also that most commercial payers do follow, rather than lead, CMS when it comes to approving new surgeries at times, and so I think they look to see that if Medicare has blessed an ASC performing a procedure, it's very likely then the commercial payer will also allow the ASC to perform that procedure on their patients as well. Well, tell us about the additional procedures CMS is proposing in this rule, and the very intriguing other things that they're potentially proposing when it comes to procedures.

Kara Newbury: 5:56
So, there are actually three different proposals at play this year with regards to the ASC-payable list and CMS has indicated that they plan to adopt only one of these proposals. So the first is basically what CMS has been doing for years. ASCA and other groups, often proactively, go and meet with staff at CMS and state our case for why specific codes should be added to the ASC-payable list. It is a very piecemeal process; it's not all that transparent because CMS does not include in the proposed or the final rules which organizations asked for which codes, and under that standard way of doing business CMS has proposed to add 11 codes to the ASC Covered Procedures List for 2021. Probably the most well-known and of interest to a lot of our members is total hip arthroplasty. And total hip arthroplasty is an interesting one because it was only removed from the inpatient-only list starting this year for 2020. Typically, CMS has taken a longer period of time, at least two years between when a code is removed from the inpatient-only list and then makes its way to the ASC-payable list. The other options that CMS has put forth for 2021 are interesting. So the first is that there would be a more formal nomination process, and ASCA for years has sort of criticized CMS for not having a more set nomination process in place. So under this, CMS would allow providers, specialty groups, organizations such as ASCA to provide a list of codes, along with supporting documentation, on why they think those codes should be added to the ASC-payable list. This would be due by March 1 of the year prior to when the new codes will go into effect. If CMS disagrees with the nomination, the agency would have to provide specific rationale for not including those codes in the final rule. So this is important because this was one of the aspects of ASCA’s legislation for the past several sessions, where we have stated that if CMS is refusing to move certain codes to our payable list, they need to tell us why so that we can then refute their reasoning in future years. So as I mentioned, CMS does comment in the proposed rule that this would provide a more transparent process; they would indicate which specialty organizations or other trade groups or individuals were asking for certain codes in the rulemaking process. The third option is that CMS is looking to basically greatly expand the number of codes that they would add to the ASC Covered Procedures List in 2021. They would add 267 codes—that does include the first 11 codes that we mentioned in the first option—if they were to select this option. And what would CMS be doing in order to add a sweeping number of codes? They would be getting rid of some of the exclusionary criteria that are currently in place when they're evaluating whether codes should move. So CMS is proposing under this alternative to remove the exclusionary criteria one through five, which are generally result in extensive blood loss, require major or prolonged invasion of body cavities, directly involve major blood vessels, generally emergent or life-threatening in nature and commonly require systemic thrombolytic therapy. So CMS would get rid of all five of those criteria, and it would bring in a lot more codes starting in 2021. I forgot to mention that the second option, the alternative of adding the nomination process, would not begin obviously until 2022 because they will just be implementing the process during 2021.

Bill Prentice: 10:13
Kara, that's a lot of information and at the outset you mentioned there are these three different approaches to the procedures and that CMS is planning on only adopting one. To my mind, it seems that they could do all of it, rather than piecemeal, and I would imagine that’s something we would probably be recommending to them. Am I right in that regard?

Kara Newbury: 10:36
Absolutely. And while the Government Affairs Committee for ASCA and the Board of Directors have not yet met to discuss our comments, they will do so next week. I will be recommending that ASCA not only request that these 267 codes be added for 2021, but that CMS also continue with that more formal nomination process starting with 2022.

Bill Prentice: 11:02
Thanks for that clarification. You mentioned the inpatient-only list a couple of minutes ago and I think one of the real surprises in this draft rule was the announcement that CMS intends to eliminate the inpatient-only list, which identifies obviously the procedures that can only be reimbursed if performed in an inpatient hospital and not outpatient. What do you think the ramifications of that change will be if it actually ends up in the final rule?

Kara Newbury: 11:29
Bill, to your initial point about more deference and recognition of the clinical decision-making of the surgeon, I think that CMS is acknowledging that these really should be choices that are made between the clinician and the Medicare beneficiaries, and that the clinician is the best individual to determine the appropriate site of service for care. While CMS acknowledges in the rule that they believe that it would be fair game for the agency to completely get rid of the inpatient-only list in one year, starting with 2021, they did decide to phase out the list over a three-year period, probably to provide a little more comfort level to those who feel that this is too sweeping of a policy change. So the first codes that would be removed from the inpatient-only list are 300 codes that fall under the musculoskeletal category, and CMS has acknowledged that many of these codes are not only being done in hospital outpatient departments already on private payer cases but also in the ASC setting.

Bill Prentice: 12:47
And so to that last point, I would imagine we're hopeful that this decision, if it ends up being finalized, regarding the inpatient-only list will also hopefully lead to something we've been advocating, which is breaking down that barrier between the silos and having an HOPD list versus an ASC list for the things that Medicare would reimburse. And obviously that 267 procedures kind of goes a long way there, but to actually formally kind of break down those silos is something we've been asking for and recommending and I think this decision, if finalized, probably gives us hope that that'll happen at some point as well.

Kara Newbury: 13:25
It does. I do want to point out to the listeners, though, that CMS has stated in the proposed rule that any codes that are currently on the inpatient-only list in 2020 are not eligible for addition to the ASC-payable list for 2021. ASCA will certainly advocate strongly for those codes that our members tell us are safe and should be performed, eligible for the ASC-payable Covered Procedures List, moving forward. But I do want to just warn everyone that we're not going to see all 300 of those musculoskeletal codes on the ASC list for 2021.

Bill Prentice: 14:05
Important to remind us all of that, so thank you. Lastly, in terms of what's in the rule, quality reporting is another area where we usually rely on this rule to advance new measures to show evidence of our excellent safety and quality record. However, it doesn't seem that CMS has proposed anything this year. Did I miss anything?

Kara Newbury: 14:26
You did not miss anything, Bill. CMS did not propose to remove any measures from the ASC Quality Reporting Program for 2021, nor did they propose to add any additional measures for future years. You know, I think this is one area of the rule that was probably the most impacted by COVID-19. CMS probably just didn't think it was an appropriate time to be adding additional burdens or requirements to facilities at this time.

Bill Prentice: 14:56
Great point. Overall, I believe ASCs and the patients we serve will come away from this proposed rule with a sense of progress and accomplishment on several fronts, and I think our members can and should take a lot of pride in the work that you and your team have put in, in terms of working with CMS each year. I'd be remiss however, if I did not mention that there's one issue that I think we were disappointed that CMS acknowledged, which was the weight scalar and its impact on ASC payments, but took no action to correct. Clearly there is a budget implication but what do we have in terms of insight as to why CMS failed to fix this?

Kara Newbury: 15:34
Bill, that's an excellent point and I just had a great conversation about that with one of my contacts at CMS yesterday and we were kind of commiserating about the fact that the most troubling aspect of Medicare payment programs, overall, is that CMS must maintain budget neutrality in each separate payment system. So whether it's the Physician Fee Schedule, the hospital outpatient department payment system or the ASC payment system, CMS is trying to contain costs in silos. So there's absolutely no incentive then for volume to shift from the more expensive HOPD setting to the ASC setting. With regards to our proposal to what we've been asking CMS to do, which is to eliminate the ASC weight scalar, they would statutorily be allowed to just eliminate the weight scalar, but the budget implications were fairly significant looking at about a billion dollars a year according to the Office of Management and Budget. You know, I might not agree with those calculations, but that is what CMS is being given in terms of information. And then our other option, which was to just incorporate our volume into the calculations when the hospital outpatient departments adjustment is made, was deemed to be not allowed under the current statute. And so that would be a statutory change and one that we can pursue with our friends in Congress next session.

Bill Prentice: 17:09
Well, as a layperson, let me see if I can explain this weight scalar to you in a way that might make sense to our listeners. So the problem is that if they did away with the weight scalar and therefore our reimbursements went up a bit, which hopefully would drive migration from the higher cost setting to us, Congress and the budget folks at OMB would only be looking at the additional cost of adding higher reimbursement to our procedures and wouldn't actually look at or see the savings that we're generating by shifting cases from that higher expense setting to us. Is that it in a nutshell?

Kara Newbury: 17:51
That's correct.

Bill Prentice: 17:53
Great. Well, obviously a lot of work to do there and that's something obviously our members can be of great assistance in terms of trying to educate their lawmakers on the ramifications of this budget policy and how it is actually artificially raising the cost of the Medicare program in ways that we could help fix. The bottom line is that we have until October 5, if I'm correct, to submit comments about the proposed rule to CMS. And we obviously want to make good use of this time and solicit as much input from our members as possible before finalizing our comments to CMS in our recommendations about what we like and don't like in this proposed rule before it gets finalized. Walk us through that process and what can our members do to help us in terms of trying to make the strongest case to CMS to make sure the things that we want in this rule are in it?

Kara Newbury: 18:49
Sure. So the ASCA Board of Directors and Government Affairs Committee will be meeting next week, and we do an initial look at ASCA’s potential comments and they help drive that process. And then ASCA staff, like myself, will draft the comment letter. We will also be drafting some template letters; we know that all of our facilities are very busy taking care of patients and so we try to provide some language that you all can use, and obviously picking and choosing which issues are most impactful to your facility, to provide your comments to CMS and support those policy changes that are going to benefit your facility. So we will have those draft templates available, probably in the next three or four weeks, and then we'll have another few weeks to submit comments before the deadline that Bill mentioned of October 5.

Bill Prentice: 19:56
That's great. And I can't stress enough how important it is for CMS to receive an abundance of comments in support of the things that we like, that quantity shouldn't matter but it does matter. Well, this concludes our discussion today. I'd like to thank Kara and her staff here at ASCA for the exceptional advocacy and expertise they provide our members on the rulemaking process and all the other issues we advocate to the administration and Congress about throughout the year. And as always if anyone listening has thoughts or suggestions for future topics or how we might improve these presentations, please do not hesitate to send us your thoughts and recommendations. We want to hear from you. We want to make sure that these podcasts are as useful to you as possible. Thanks for listening. Please stay safe, stay healthy.