Regulatory Affairs: Proposed Medicare Fare Hike Disappointing

As the current U.S. inflation rate approaches 10%, ambulatory surgery centers are already facing financial pressure from expenses for goods and services and staffing costs. So while CMS has proposed an increase to ASC facility fees for next year, the fact that it’s only 2.7% is disappointing for facilities across the country. The proposed rate increase is the same for hospital outpatient departments.

“Obviously, the rate increase that’s being proposed is lower than it should be based on what we’re seeing in terms of the current cost of doing business in our surgery centers,” says William Prentice, CEO of the Ambulatory Surgery Center Association (ASCA).

CMS made the proposal in its Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule in mid-July. The federal agency is accepting comments until Sept. 13 and will issue the final rate that will go into effect on Jan. 1 in November. To comment on the regulations, follow the “submit a comment” instructions at www.regulations.gov.

CMS is in the final year of a five-year pilot that applies the Hospital Market Basket as the price index to determine the next year’s Medicare payment rates for ASCs. The Hospital Market Basket is a very targeted look at how inflation impacts the healthcare industry and it’s the same index CMS uses for HOPDs, which is why the proposed 2023 increase is 2.7% for both. The 2.7% figure is an overall average; actual reimbursements can vary widely based on the type of surgery, the location in which it’s performed and other factors.

Before the pilot began, CMS had used the Consumer Price Index for All Urban Consumers (CPI-U) to determine payment rates for ASCs. The CPI-U is a broader inflationary index not specific to healthcare spending. “The result of that was ASCs got smaller increases than HOPDs in most years, which increased the already large delta between what ASCs and HOPDs got paid for the same procedure,” says Mr. Prentice.

Ironically, the 2023 payment rate would likely be higher had CMS applied the CPI-U to ASCs, but Mr. Prentice says using the Hospital Market Basket is better for ASCs in most years and over the long haul. ASCA will lobby CMS to continue using it next year when the five-year pilot expires.

CMS picked a moment in time before inflation increased to its current rate when it applied its funding formula for next year. Mr. Prentice says he’s hopeful the agency will select a more recent figure before it finalizes the 2023 rule in November. “Our comments will note our disappointment and say the 2.7% misses the mark substantially in terms of capturing what the actual inflation is and what we’re seeing in the real world,” he says.

Medicare patients make up half of the caseload at Lakeland (Fla.) Surgical & Diagnostic Center, and its Executive Director Nikki Williams, RN, CNOR, says the bigger the bump they receive, the better. Prices for some supplies and medications used at Lakeland have doubled or even tripled.

“Supply costs are up so much that I don’t know if the 2.7% would really impact our business that much,” says Ms. Williams. “Medicare is very important to us, and we’d obviously love to see a meaningful increase.”

In the meantime, the facility is taking steps to save money at every opportunity to prepare for reimbursements that might not keep pace with the cost of care. They joined a second group purchasing organization to increase the number of vendors from whom they can choose. They cut their cost of providing meals for staff by switching from a national food company to a different chain that has a store nearby and saved 20%. Lakeland’s staff is always instructed to not open any supply unless they’re certain a surgeon will use it. When surgeons want to bring in a new product, management makes sure they know what it costs. 

Ms. Williams also says negotiating with product reps should be perpetual, even if they’re a regular provider of items that are frequently used. “I always ask if we can get a better price on things,” she says. “If you don’t ask, you’ll never know. And sometimes we do get pretty good reductions as a result.” OSM