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CMS Final Rule Gives ASCs 0.2% Increase for 2011

In 2011, the final year of the transition to a new payment system, ASCs will receive a 0.2 percent across-the-board increase in Medicare payments and continue to have updates based on the consumer price index rather than the hospital market basket, according to CMS' final rule.


The slight increase is the result of a 1.5 percent inflationary update and a negative 1.3 percent productivity adjustment. The latter is lower than in the proposed rule, which would have produced no increase for 2011.


This is the final step in moving Medicare payments for ASCs from the "grouper" system to the revised ASC payment system, based exclusively on the relative weights used in the hospital outpatient prospective payment system.


ASC industry leaders noted CMS rejected their requests to switch to the hospital market basket as the ASC inflation index. "Aligning the indexes across ASCs and HOPDs would have provided a positive update for ASC payments consistent with MedPAC’s recommendations," said Andrew Hayek, chair of the Ambulatory Surgery Center Advocacy Committee and president and CEO of Surgical Care Affiliates. CMS said it decided against moving to a different index because it did not have sufficient information or impetus to make the change in 2011.


The following is an overview of the changes, based on an analysis by the ASC Association.


1. Inflation update. The 2011 change in Consumer Price Index for All Urban Consumers is estimated at 1.5 percent. In comparison, the HOPD update will be 2.35 percent, based on the hospital market basket increase of 2.6 percent, reduced by 0.25 percentage points under the healthcare reform law.


2. Productivity adjustment. A reduction of 1.3 percentage points in the productivity adjustment for 2011 puts the ASC update at 0.2 percent. CMS responded to stakeholders' concerns that assumptions in the proposed rule of 2008-2009 productivity gains were too high and reduced the adjustment by 0.3 percentage points. However, the ASC Association will protest the 0.2 percent adjustment because it is inconsistent with MedPAC's recommended update of 0.6 percent.


3. Conversion factor. The ASC conversion factor will rise to $41.939 for CY 2011 from $41.873 in CY 2010. The change accounts for budget neutrality in recalibrating the wage index and the 0.2 percent increase.


4. Scaling of ASC relative weights. The final rule establishes a scaling factor of 0.9238, which is more favorable than the originally proposed factor of 0.9090 but significantly worse than the 2010 factor of 0.9567, partly because these are the fully transitioned weights and because OPPS relative weights for ASC procedures increased. The scaling factor is applied each year to ensure that changes to the APC relative weights, used to determine HOPD rates, do not create an aggregate increase or decrease in ASC payments.


5. Wage index. CMS will continue using the pre-floor, pre-reclassified wage index to adjust ASC payments for geographic variation of labor costs. Starting in 2011, variation will be particularly pronounced in some markets where the healthcare reform law sets the hospital wage index for inpatient and outpatient services at 1.0 — these "frontier states" include Montana, Wyoming, North Dakota, South Dakota and Nevada. CMS recognized this divergence in rates but suggested that the law prevents it from extending the policy to ASCs.


6. Quality reporting. CMS has once again deferred implementation of quality reporting, which would reduce payments to providers not reporting quality data. However, the reform law directs CMS to develop a report to Congress on its plans to implement value-based purchasing for ASCs.


7. Waiver of cost-sharing for preventive services. Several HCPCS codes for colonoscopies will be affected by the waiver of beneficiaries' deductible and coinsurance for certain preventive services under the reform law.


Read the CMS final rule (pdf).


Read the ASC Association's response to the final rule (pdf).

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