FASA Facts 5-Year Freeze in Medicare Payments to Ambulatory Surgery Centers Limits Beneficiary Access & Increases Their Out of Pocket Costs
By admin | January 1, 2003
Section 626 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 freezes Medicare payments to ambulatory surgery centers (ASCs) until December 31, 2009. Absent the freeze, ASC payments would be updated annually by the increase in the Consumer Price Index for Urban Areas (CPI -U). In the last ten years, ASCs have received only four full updates. Between 1993 and 2003, ASC rates, if increased at CPI -U, would have increased by more than 47%. However, Medicare ASC payment rates grew by less than a third of that amount.
As a result, Medicare rates are already substantially below commercial reimbursement. A recent study for the Texas Workers’ Compensation Commission found ASC payments from private health plans to be 233% higher than Medicare. This same study found that while Medicare payments to other types of providers were also below commercial rates, ASC payments were even lower. This trend will only worsen unless Congress lifts the freeze.
If Congress does not act, this extended freeze could seriously compromise ASCs’ ability to offer the full range of high quality surgical services to Medicare patients. Medicare beneficiaries do not have access to many of the improvements in technology that have greatly enhanced the quality of surgical care because ASC payments have fallen so far behind inflation. ASCs simply cannot afford to provide those services to Medicare patients.
When a beneficiary has a surgical procedure performed in the ASC, the maximum copayment is 20% of the ASC rate. By contrast, copayments in the HOPD can be as high as 50% of the hospital payment. The erosion in Medicare ASC payments means that beneficiaries must spend millions of their own dollars because their choice of where to have surgery is limited. Not only does it cost beneficiaries less when they have their surgeries in ASCs, but it costs the Medicare program less as well. In 2003, Medicare saved almost half-a-billion dollars on services performed in ASCs.
ASCs face increasing staff, medical liability insurance and drug costs just like other health care providers. According to CMS data, labor costs are almost 40% of ASC costs. The majority of these are nursing costs, which according to the Department of Labor have increased an average of 3.72% annually over the last several years. It is expected that these costs will continue to rise during the freeze. Professional liability insurance costs and availability are at crisis points in at least 19 states. The costs of other types of business insurance have also skyrocketed. As costs for ASCs increase while reimbursement is frozen, ASCs may not be able to afford to provide services to Medicare beneficiaries. Hospitals already receive higher Medicare payments for most ambulatory surgical procedures. Over the past five years alone, HOPDs received an average annual update of 2.54%, while ASCs only received an average annual update of 1.16%. A procedure paid $317 in both settings in 2000 would currently be paid $359 in an HOPD or $26 more than in the ASC. If the freeze is left in effect, this will increase to $90 by 2009.
Unless Congress acts to eliminate the freeze in ASC payments, these inadequate payment rates will continue and limit Medicare beneficiaries choices of where to have their surgeries, make them wait longer for surgery, and increase their out-of-pocket costs. For these reasons, Congress should eliminate the freeze on ASC rates.
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