ASCs and Healthcare Reform
As the new health reform law, the “Patient Protection and Affordable Care Act”, was debated and passed by Congress, the ASCAC remained committed to spreading the message that ASCs can provide the most cost-effective surgical care – both for patients and payors— and thus help contain the tremendous costs of expanded insurance coverage for U.S. taxpayers. As the Obama Administration and the medical community move forward with the complex task of health reform implementation, ASCs continue to be an important partner in providing essential surgical services for Americans.
Key highlights from the legislation affecting ASCs are below.
Providing Access to Care. The reform bill will expand coverage to an additional 32 million Americans. As financial barriers to benefits and services are removed, the entire medical system will be challenged to develop or maintain capacity to meet their needs. ASCs throughout the country can be an important, cost-saving contributor of system capacity, particularly for services such as screening colonoscopies that currently uninsured patients have not sought or delayed.
Additionally, with the expansion of the Medicaid program, it will be important for ASCs to work closely with their state associations in order to understand their state’s program, ensure adequate reimbursement and inclusion in provider networks, and help beneficiaries access care in the ASC setting.
Expanding Preventive Care. A key provision of the bill waives patients’ coinsurance for the highest-rated preventive services recommended by the U.S. Preventive Services Task Force, such as colorectal cancer screenings. With increased access to coverage and no co-pay for this service, it is likely that ASCs will experience a higher demand for these procedures. Currently, ASCs perform about half of all Medicare colonoscopies.
Productivity Adjustments. With tremendous pressure on Congress to control health care costs, ASCs should be promoted as the most cost-effective solution for surgical procedures for both patients and payors, including the taxpayers who fund the Medicare program. However, Congress began a 6-year rate freeze under Medicare in 2004, despite the annual increases in prices for the goods and services needed to provide outpatient surgery. As a result, the relationship between ASC and Hospital Outpatient Departments (HOPDs) payments fell from 86 to 57 percent for identical services.
The new health care reform law mandated a "productivity adjustment.” Intended to control cost growth, the "productivity adjustment" will reduce annual payment updates for most healthcare providers. This adjustment goes into effect for ASCs in 2011, the year in which ASCs rates would have been updated to account for the inflation in the prices of goods and services they need. Instead, the entire 1.6 percent inflation update was reduced to zero by the productivity adjustment. This means ASC payments will have been frozen for seven of the past eight years even though input costs continue to rise. The hospital market basket is projected to be a 2.4 percent update, and after their statutorily mandated reduction of 0.25 percent, will receive a 2.15 percent increase in 2011. As a result, the relationship between ASC and Hospital Outpatient Departments (HOPDs) payments will fall from 86 to 57 percent for identical services.
Supporting Value-Based Purchasing. The ASCAC will be working with CMS to develop a report for Congress by 2011 required by the new law to describe how Medicare could incorporate value-based purchasing (VBP) strategies in ASCs. The ASCAC will work with CMS to ensure that the agency’s recommendations are appropriate for the industry and provide plenty of time for ASCs to implement reporting before payments are at risk for performance. Consistent with other value-based systems, the ASC VBP program should be designed to not only reward health care providers and facilities who achieve performance measures, but also those who demonstrate improvement in quality. The industry has also encouraged CMS to consider a VBP design which will fund the quality bonus pool through shared savings, allowing ASCs to recoup a part of the savings they produce for the Medicare program.
Download the Letter to Secretary Sebelius on Value-based Purchasing.
Working with IPAB. The health reform bill will create an Independent Payment Advisory Board (IPAB) charged with reducing Medicare costs. Beginning in 2014, if the Medicare growth rate surpasses its target, IPAB would be required to provide recommendations on how Medicare could reduce program spending. As the law is written, IPAB could recommend additional reductions in Medicare payments to ASCs and other providers.
