Surprise! APGs may come to surgery centers first -- Are you ready?
Surprise! APGs may come to surgery centers first -- Are you ready?
Managers question whether rates will be fair
Are you a freestanding surgery center manager who thought you wouldn't have to be concerned about ambulatory patient groups (APGs) for several years?
Well, the Health Care Financing Administration (HCFA) is about to issue a wake-up call: A published notice may be merely weeks away that is expected to propose doing away with the current ambulatory surgery center (ASC) reimbursement groups and instead using an APG-like classification system to pay for procedures in freestanding surgery centers. Unlike the proposed APG system for hospital outpatient services, which is stalled in Congress, this plan would not have to receive legislative approval.
Here's a summary of what HCFA is expected to propose and its potential impact:
* HCFA is expected to require that all surgery centers undergoing Medicare surveys demonstrate ongoing quality assessment and performance improvement, regardless of whether the centers are accredited. Same-day surgery experts say this proposal could make the Medicare surveys more flexible, but they question whether bureaucrats are open to that type of flexibility.
* HCFA should include its proposed new groupings and reimbursement for procedures that are performed in ASCs. Surgery center managers express concern that this new classification system could mean less money for ASC procedures.
* HCFA is expected to include proposed additions and deletions to the current ASC list of procedures. Some fear that this information, which was to be published by Dec. 31, could be delayed while HCFA mulls the new classification system.
* Because hospital reimbursement for same-day surgery procedures is dependent on the ASC reimbursement system, hospitals could see a significant number of procedures go from cost-based reimbursement to the blended formula of cost and the ASC reimbursement rate.
What would the system look like?
Similar to the current ASC reimbursement system, APGs would be a prospective payment system (PPS) that uses flat rates for reimbursement. Exactly what the plan would look like is still up in the air, but likely components were discussed this summer in a town meeting organized by HCFA for ASC managers.
One key point is that the system probably would include only a fraction of the 290 APGs that are proposed for hospitals, since the current APG system covers outpatient medical and surgical services in a hospital.
"What we were talking with them about is not a total system of APGs, which has more bells and whistles than systems that we were envisioning for ASCs," says Vivian V. Braxton, director of the Division of Outpatient Surgery and Services of the Health Care Financing Administration. "Our discussion with them was about the possible use of a different classification system that would be reflective of APGs' classification -- classifying procedures based on clinical similarity and similarities in resource use."
HCFA is reconsidering the criteria it uses to determine what procedures are appropriate to be placed on the ASC list of covered procedures. At the town meeting, ASC managers participating said they feel cheated because they are limited by a list of covered procedures to perform. ASC mangers said that because hospitals are less regulated, they can perform more innovative procedures.
More procedures may be covered in ASCs
Because HCFA may redefine the criteria for ASC procedures, it also may increase the number of procedures covered in ambulatory surgery centers. This change also would impact hospitals because their reimbursement for same-day surgery procedures is based on whether a procedure is included in the list of ASC procedures. Thus, some -- and perhaps many -- hospital outpatient surgery procedures that currently are reimbursed on a cost basis could move to the blended formula of cost and ASC reimbursement.
And HCFA has another potential change up its sleeve: It is likely to suggest that ASCs undergoing Medicare accreditation would have to demonstrate they are performing quality assessment and quality improvement -- regardless of whether they are being accredited by the Joint Commission on Accreditation of Healthcare Organizations or the Accreditation Association of Ambulatory Health Care. (For more information, see story, p. 135.)
ASC managers are caught off guard by what is likely to be a dramatic change in the way their facilities are reimbursed. The biggest issues for same-day surgery managers are: Which procedures would be grouped together? And would APGs cover the costs of the procedures?
"We're talking right now about a system in which we have eight to nine procedure groupings," says Michael A. Romansky, JD, partner in health law practice of Washington, DC, office, McDermott, Will, and Emery. Now HCFA potentially could form dozens of different groupings, but until surgery centers know what the payment rates will be, it is difficult to be enthusiastic about the upcoming proposal, Romansky says. Romansky serves as legal counsel for American Society of Outpatient Surgeons in Chicago, the Outpatient Ophthalmic Surgery Society in San Diego, and the Arthroscopy Association of North America in Rosemont, IL.
He also expressed concern that the development of a new procedure classification system could delay the publication of the proposed additions and deletions to the ASC list of covered procedures. A delay means surgery centers are left waiting to perform procedures that haven't been added to the list of covered ASC procedures.
In general, the reaction from the ASC industry has been one of trepidation.
"Surgery centers, historically, have not wanted to be guinea pigs," Romansky says. "HCFA's position of possibly applying [APGs] to ASCs in advance of application to hospitals raises some potential benefits and potential problems."
For surgery center managers who are concerned about whether APGs will cover costs, there is a bright spot. Rather than relying on hospital cost data, HCFA would use surgery center cost data collected in 1994 to set the APG rates. When the APG proposal is published in the Federal Register, HCFA will release the cost data it has collected. ASCs will have at least 60 days to provide feedback on the proposal. (For sources at HCFA, see source box, p. 136.) In addition, the published notice likely will include a proposal for an ASC advisory board to offer industry input.
APGs, which are designed to be the outpatient equivalent of diagnosis-related groups (DRGs) are designed to group procedures for payment based on the amount and type of resources used in a same-day surgery visit. These resources might include pharmaceutics, supplies, ancillary tests, equipment, the type of room needed, and treatment time. At this point, one of the industry's biggest concerns is that HCFA will lump together procedures in APG groups that call for completely different resource consumption.
One example based on preliminary APG data is APG group 25, says Steven Gunderson, DO, administrator and medical director of Rockford (IL) Ambulatory Surgery Center. That APG group includes CPT 29881, simple arthroscopy of the knee with medial meniscectomy, and CPT 29888, knee arthroscopy with arthroscopically aided anterior cruciate ligament (ACL) repair augmentation or reconstruction.
"Both are performed in ASC settings, but the resource consumption is tremendously different," Gunderson says. He points to the fact that arthroscopically aided ACL repair may take up to three hours or more in the OR and requires special equipment, including expensive sutures.
Will it even out in the end?
At the town meeting, the question was asked: How can you put those in the same APG?
"The standard answer was that it will all even out in the end," Gunderson says. "But . . . if most of what you do is higher-resource based cases -- you may have a specialty orthopedic facility and do a significant amount of those cases -- it's a significant amount of time and resources with little reimbursement."
Unless HCFA officials change their plans significantly, Gunderson fears that procedures will simply be regrouped from the ASC groups to APG groups, with the final result being decreased reimbursement for ASCs. "It seems to be what they do every time they reshuffle the legislative processes," he says.
At the same time, however, ASC managers applauded the government's movement toward changing what they call an outdated system of reimbursement.
"As you covered in Same-Day Surgery, some people are having surgery and walking out of the building"almost immediately, says Nancy Kessler, RN, MS, executive director of El Camino Surgery Center in Mountain View, CA. "Fifteen years ago, when the regs were written, that could not have been anticipated. . ." (For more information on the revolution in reduced postoperative stays, see Same-Day Surgery, October 1996, p. 109.)
"It's clear the requirements are outdated," Kessler says. "They haven't kept up with technology. They haven't kept up with the realities of managed care, from our point of view."
Even HCFA officials acknowledge that a change is overdue.
"Our regulations haven't been changed in over 10 years, and there's certainly room for improvement," says Terri Harris, health insurance specialist at HCFA.
There could be some benefits
ASC managers actually may realize benefits under a new reimbursement system, industry experts say.
"If you have more groupings, with fewer procedures in each grouping, you are more likely to come up with a rate system in which the rates reflect actual cost experience," Romansky says. "Another benefit may be that if this allows HCFA to move off the idea of having a list and basically pay for many more procedures that should be on a list [if one existed], then that's a very positive opportunity."
Reimbursement experts are cautious in their optimism, however. "We want an expanded list but not at the expense of rates that are inadequate," Romansky emphasizes.
At press time, he and others were in a wait-and-see mode. "It's going to be very hard to evaluate until we see proposed rates," Romansky says. *
For more information on changes in reimbursement for ambulatory surgery centers, contact:
* Vivian V. Braxton, Director of the Division of Outpatient Surgery and Services, Health Care Financing Administration, 7500 Security Blvd., Baltimore, MD 21207. Telephone: (410) 786-4571. Fax: (410) 786-0681. E-mail: [email protected].
* Steven Gunderson, DO, Administrator/Medical Director, Rockford Ambulatory Surgery Center, 1016 Featherstone Road, Rockford, IL 61107. Telephone: (815) 226-3300. Fax: (815) 226-9990.
* Nancy Kessler, Executive Director, El Camino Surgery Center, 2480 Grant Road, Mountain View, CA 94040. Telephone: (415) 961-1200. Fax: (415) 960-7041.
E-mail: [email protected].
* Michael A. Romansky, Partner in the Health Law Practice, McDermott, Will, and Emery, 1850 K St. NW, Suite 500, Washington, DC 20006. Telephone:(202) 778-8069. Fax: (202) 778-8335. E-mail: internetmro [email protected].
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