Ambulatory surgery centers' Medicare pay rate questioned

Overpayments may be pulling services from physician offices and outpatient departments.

By Markian Hawryluk, AMNews staff. Nov. 25, 2002.

Washington -- Concern is growing over the accuracy of Medicare payments to ambulatory surgical centers.

These centers were approved for Medicare reimbursement in 1982 as a way to provide low-risk surgeries in a less-expensive ambulatory setting. With advances in technology and changes in practice patterns, many procedures once conducted in hospital outpatient departments or physician offices are now being provided in ASCs.

In 2001, more than 3,000 ASCs participated in Medicare, performing 3 million procedures and receiving about $1.6 billion in payments. Most are for-profit and freestanding facilities, as opposed to hospital-operated, and are located primarily in urban areas.

But Medicare's ASC fee schedule still relies on 1986 cost surveys that have been adjusted each year for inflation. That may mean payments are not aligned with costs.

"We do not have recent cost data that would tell us if payments exceed costs," said Ariel Winter, a staff member at the Medicare Payment Advisory Commission.

And that may mean that ASCs will pull more services from physician offices and outpatient hospital departments the longer the system is in place.

The Centers for Medicare & Medicaid Services proposed a new ASC payment system in 1998. But the ASC proposal was never implemented.

Winter said there is evidence to suggest that current rates may be too high due to advances in technology and productivity over the last 16 years. Procedures that were once labor- and resource-intensive might now be fairly routine and low-cost for ASCs to perform. [...]