Analyzing CMS’ 2023 Proposed Medicare Payment Rule

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Analyzing CMS’ 2023 Proposed Medicare Payment Rule

A mixed bag for ASCs

The Centers for Medicare & Medicaid Services (CMS) proposed a new complexity adjustment payment mechanism for ASCs in its 2023 proposed payment rule for ASCs and hospital outpatient departments (HOPD), which, if adopted, will provide Medicare beneficiaries better access to care. The agency also proposed to continue to align the ASC update factor with that used to update HOPD payments. Under the proposal, CMS would continue to use the hospital market basket to update ASC payments through CY 2023 as the agency assesses this policy’s impact on volume migration.

CMS released the 2023 proposed payment rule on July 15.

Other initial observations about the 886-page proposal follow.

Average Rate Update of 2.7 Percent

If the proposed rule were to be finalized as drafted, ASCs would see, on average over all covered procedures, an effective update of 2.7 percent, which is a combination of a 3.1 percent inflation update based on the hospital market basket and a productivity reduction mandated by the Affordable Care Act of 0.4 percentage points. This is an average and the updates might vary significantly by code and specialty.

The information below provides a comparison between the 2023 ASC and HOPD reimbursement proposals:

Inflation update factor 3.1% 3.1%
Productivity reduction mandated by the ACA 0.4 percentage points 0.4 percentage points
Effective update 2.7% 2.7%
Conversion factor $51.315 $86.785

The ratio of the conversion factors is 59.13 percent, which is slightly lower than the 59.3 percent ratio in the 2022 final rule.

Positive Complexity Adjustment Policy for ASCs

Under this proposal, CMS would provide increased payment to ASCs for combinations of certain service codes and add-on procedure codes that are eligible for a complexity adjustment under the hospital outpatient prospective payment system (OPPS). While add-on codes, also referred to as “packaged” codes, do not come with additional reimbursement, the addition of the add-on codes to a primary procedure code often changes the complexity of the procedure, making it more costly to perform.

CMS identified 52 different complexity adjustment code combinations for codes that are payable in the ASC setting and would be eligible for a complexity adjustment if the procedure were performed in an HOPD. Many of these code combinations involve cardiovascular procedures. CMS proposed to assign each eligible code combination a new C code that describes the primary and the add-on procedure(s) performed. C codes are unique temporary codes and are only valid for claims for HOPD and ASC services and procedures.

CMS estimates that ASC services, in general, are paid approximately 55 percent of the HOPD rate for similar services in CY 2021. When the agency compared the HOPD complexity-adjusted payment rate of these primary procedure and add-on code combinations to the ASC payment rate for the same code combinations, it found that the average rate of ASC payment as a percent of HOPD payment for these code combinations was only 25 to 35 percent.

ASC Covered Procedures List and Nomination Process

Disappointingly, CMS proposed to add only one code to the ASC Covered Procedures List (ASC-CPL) for 2023, CPT 38531 (Open bx/exc inguinofem nodes). CMS stated in the rule that it continues “to focus on maximizing patient access to care by adding procedures to the ASC-CPL when appropriate” and encourages stakeholders "to submit procedure recommendations to be added to the ASC-CPL, particularly if there is evidence that these procedures meet our criteria and can be safely performed on the typical Medicare beneficiary in the ASC setting.” ASCA submitted 47 codes, requested by ASCA members, to CMS payment policy staff in March 2022 for consideration. Outcomes data from our facilities will be critically important as we continue to advocate for the expansion of the ASC-CPL. Please write Kara Newbury if you have any information that will help in these efforts.

Proposed Name Change and Start Date of Nominations Process

In 2022, CMS finalized a nominations process that will provide stakeholders the opportunity to formally submit codes for consideration for the ASC-CPL. In the 2023 rule, CMS proposed to change the name of the process from “Nominations” to the “Pre-Proposed Rule CPL Recommendation.” CMS believes the current name of the process may suggest an unintended formality or limitation, one that implies the nominations process is the preferred, primary or only means by which interested parties may submit recommendations.

In addition, CMS proposed to revise the start date of the recommendation process in the regulatory text. It proposed to change January 1, 2023, to January 1, 2024, so that the text at 42 CFR §416.166 - Covered Surgical Procedures (d) would specify that on or after January 1, 2024, an external party may recommend a surgical procedure by March 1 of a calendar year for the ASC-CPL for the following calendar year. This means that the process would not be in place until the 2025 rulemaking cycle. CMS will continue to welcome all procedure submissions through the public comment process, as it has in previous years.

ASC Quality Reporting Program Updates

CMS listened to the concerns from ASCA and ophthalmic groups and has proposed to suspend mandatory reporting of ASC-11: Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery and maintain reporting for this measure as voluntary.

In addition, CMS seeks feedback on a specialty-centered approach to the ASC Quality Reporting (ASCQR) Program in the future. According to the agency, this would “allow quality-related data for ASCs to be reported on a customizable measure set that more accurately reflects the care delivered in this setting and accounts for the services provided by individual facilities.”

CMS also requests feedback on future collection of volume data, either by bringing back ASC-7: ASC Facility Volume Data on Selected ASC Surgical Procedures or adopting another volume indicator.

Proposed Rule Resources

ASCA staff has created for members a detailed Proposed Rule Analysis, which identifies and briefly summarizes the provisions that are of greatest interest to ASCs in the proposed rule. In addition, the 2023 Proposed Rule Rate Calculator shows your proposed national and local payment rates for 2023. Select your state and county from the dropdown at the top and the calculator does the rest. ASCA is working on additional resources that will be available soon, including a payment resources document. Medicare-related resources for 2023 and previous years can always be found on the Medicare Payment Resources page.

Last but not least, members and affiliates can tune in to the latest episode of ASCA’s Advancing Surgical Care Podcast and listen to ASCA Chief Executive Officer Bill Prentice and ASCA Regulatory Counsel and Director of Government Affairs Kara Newbury discuss the changes Medicare proposed to ASC payment policy, quality reporting and more.

Comments in response to the rule can be submitted through September 13, 2022. ASCA will submit comments on behalf of its members and encourages others in the ASC community to submit comments as well. ASCA will provide template letters in the coming weeks to assist with the letter writing process and publish a notice in the Government Affairs Update when templates are available.