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Surgery centers battle proposed Medicare cuts

Lack of data makes judging payment adequacy difficult.

By Markian Hawryluk, amednews staff. Jan. 20, 2003.

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Washington -- Ambulatory surgical centers may be victims of their own success. Booming growth in the number of ASCs has prompted a congressional advisory panel to recommend restraining Medicare payments to the centers in future years.

The Medicare Payment Advisory Commission has drafted recommendations for Congress to freeze ASC Medicare payment in fiscal 2004 and to cap ASC rates at the hospital outpatient payment levels for the same services. Surgery center groups have said the cuts are unwarranted and that MedPAC has no evidence that payments exceed costs.

Most ASCs are not as sophisticated in tracking their costs as hospitals. Although the Centers for Medicare & Medicaid Services surveyed ASCs on their costs in 1994, the agency had to extrapolate data for about 60% of the codes. Many of the centers did not collect data in the way needed to respond to the CMS survey.

The agency itself questioned the accuracy of the data and never implemented new rates based on the survey. Current ASC rates are still based on 1986 cost data.

That has left MedPAC with little hard evidence on which to judge the adequacy of today's payment rates.

"Because the last survey of ASC costs was conducted in 1994, we have no recent data on costs," said MedPAC analyst Ariel Winter. "Thus, we would look at market factors in judging payment adequacy."

Those factors include the number of new centers entering the market, growth in the volume of services provided and ASCs' access to capital. All those factors suggest healthy payment rates. Total Medicare payments doubled from $800 million in 1996 to $1.6 billion in 2001, and the number of Medicare-certified ASCs has doubled since 1991.