Quality and Efficiency Improvement in Ambulatory Surgical Centers

CMS considered the following principles in developing this report to align with other value based payment initiatives:

•    Public reporting and value-based payment systems should rely on a mix of standards, process, outcomes, and patient experience measures. Across all programs, CMS seeks to move as quickly as possible to the use of primarily outcome and patient experiencemeasures. To the extent practicable and appropriate, outcomes and patient experiencemeasures should be adjusted for risk or other appropriate patient population or providercharacteristics.

•    To the extent possible and recognizing differences in payment system maturity and statutory authorities, measures should be aligned across Medicare's and Medicaid's public reporting and payment systems. CMS seeks to evolve to a focused core-set of measures appropriate to the specific provider category that reflects the level of care and the most important areas of service and measures for that provider.

•    The collection of information should minimize the burden on providers to the extent possible. As part of that effort, CMS will continuously seek to align its measures with the adoption of meaningful use standards for health information technology (HIT), so the collection of performance information is part of care delivery.
•    To the extent practicable, measures used by CMS should be nationally endorsed by a multi-stakeholder organization. Measures should be aligned with best practices among other payers and the needs of the end users of the measures.

•    Providers should be scored on their overall achievement relative to national or other appropriate benchmarks. In addition, scoring methodologies should consider improvement as an independent goal.

•    Measures or measurement domains need not be given equal weight, but over time, scoring methodologies should be more weighted towards outcome, patient experience and functional status measures.

•    Scoring methodologies should be reliable, as straightforward as possible, and stable over time and enable consumers, providers, and payers to make meaningful distinctions among providers performance.

Background

An ASC, for Medicare purposes, is a distinct entity that operates exclusively for the purpose of furnishing outpatient surgical services to patients who do not require hospitalization and whose duration of services in the ASC is unlikely to exceed 24 hours. To be eligible for Medicare payment, ASCs must meet the definition of an ASC, be certified as complying with the Conditions for Coverage, and enter into an agreement with the CMS. An ASC may be operated by a hospital; in such cases, its Medicare agreement is made effective the first day of the hospital’s next cost-reporting period, but the ASC is paid only as an ASC and does not have the option of converting to a hospital outpatient department, unless CMS finds good reason to permit this. Additionally, the hospital must treat the ASC’s costs as a non-reimbursable cost center in its Medicare cost report.

The Medicare Payment Advisory Commission (MedPAC) attributes the growth in Medicare certified ASCs to a number of factors, including the following:

•    Positive Patient Experience. ASCs may offer some advantages compared to hospital outpatient departments (HOPD) providing same-day surgery services. For example, patients may experience the flexibility to schedule medical procedures with shorter waiting times, expediency to source of care, and lower cost sharing requirements. The growing market concentration of ASCs is associated with increased access for Medicare beneficiaries to low-risk, common surgical procedures.

•    Adequate Medicare Payments. Between 2003 and 2008, combined Medicare spending and beneficiary cost sharing on ASC surgical procedures continued to grow despite no positive updates to ASC payment rates from 2004 through 2009. As required under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub.L. 108-173), CMS implemented a revised ASC payment system effective January 1,2008. Under the revised ASC payment system, the standard ASC rate setting methodology bases payment for most services on the list of ASC covered surgical procedures on the outpatient prospective payment system (OPPS) relative payment weight multiplied by an ASC conversion factor. Despite the revised payment system, total Medicare spending for ASC services increased to $3.1 billion in 2008 compared to $2.2 billion in 2003. In addition, Medicare payments per FFS beneficiary increased to $99 in 2008 compared to $66 in 2003.

In its March 2010 Report, MedPAC stated that several factors may explain why margins on Medicare payment rates have not been compressed enough to alter physician’s and/or investors desire to operate ASCs. First, CMS does not require ASCs to collect, report, and validate cost and quality data to determine resource consumption and associated clinical outcomes. This eliminates the administrative burden and associated costs incurred through CMS compliance. Second, evidence suggests that ASCs treat Medicare beneficiaries who, on average, are healthier (e.g., less likely to experience comorbidities) and require less intensive medical procedures than HOPD-based patients. Finally he referenced MedPAC report indicates that, in 2008, HOPDs also serve Medicare and commercially insured patients but treat a higher portion of Medicaid patients when compared to ASCs (10.4% vs. 3.4%).

Newly Covered Services. CMS regularly adds procedures and services to its ASC list of covered surgical procedures and covered ancillary services. This growing list of newly covered services accounts for some degree of the volume growth observed by MedPAC in ASCs. However, this growth in the volume of newly covered services is likely lower than the actual figure, as MedPACs analysis of the impacts of newly covered services in ASCs focuses on the number of services per FFS beneficiary, and does not include the
impact of  Accordingly, ASC service volume per FFS beneficiary increased by 10.5 percent from 2007 to 2008.