OIG recommends lowering Medicare rates for low-risk outpatient surgeries, CMS balks

Noting that the government could save as much as $15 billion, the Office of Inspector General (OIG) has urged the Centers for Medicare and Medicaid Services (CMS) to equalize payment rates for low-risk surgeries performed in hospital outpatient settings with those done at ambulatory surgery centers (ASCs), but so far CMS is not enthusiastic about the idea.

In a response to the OIG, CMS pointed out that beyond the enormous impracticality of needing to get a new law passed to end budget neutrality of the Outpatient Prospective Payment System (OPPS), many Ambulatory Surgery Center Prospective Payment System (ASCPPS) rates are based on OPPS rates. Lower the OPPS rate to match the ASCPPS rate and the ASCPPS rate automatically drops too, making it necessary to lower the OPPS rate again, dropping the ASCPPS rate again, and so on in a downward spiral. Plus, there will be a practical need to clearly define what constitutes a low-risk or no-risk patient, creating another flashpoint for controversy in getting the OIG’s idea accomplished.

However, in its report, the OIG countered that with billions in savings on the line, CMS has the right and duty to seek legislation and make payment methodology changes to facilitate the equalizing of payment rates for ASC-approved low-risk surgeries between clinical sites.

The OIG calculated its savings estimates by looking at how much Medicare had saved in the past on surgeries that were performed at ASCs instead of in hospital outpatient settings — a figure it put at $7 billion during calendar years 2007 through 2011. It then estimated that if nothing changed, Medicare would potentially save $12 billion from 2012 through 2017 on surgeries performed in ASCs instead of in hospital outpatient settings.

Next, it used statistics from the Agency for Healthcare Research and Quality (AHRQ) that showed that 33 percent of hospital patients 65 and older were considered to have no-risk medical profiles and an additional 35 had low-risk medical profiles for the types of procedures that can be performed at an ASC. In total, this was 68 percent of patients. If Medicare paid the ASCPPS rate for their surgeries when they needed a procedure approved for performing in an ASC, regardless of where the procedure was performed, the government’s potential savings would be between $7 billion and $15 billion through 2017, the OIG said.

In addition, the OIG pointed out that it is not just the government’s money on the line here. With cost-sharing provisions for Medicare beneficiaries, those who have to pay a 20 percent co-pay on a surgery paid for at the OPPS rate will unwittingly pay more than those who pay a 20 percent co-pay on the same surgery performed at an ASC and paid for at the ASCPPS rate.  

“Safeguarding programs from fraud, waste, and abuse is an ongoing program management responsibility and some issues may require legislation to address,” the OIG report authors wrote. “We look forward to CMS’s final management decision in light of this clarification of the intent of our recommendations.”

http://oig.hhs.gov/oas/reports/region5/51200020.asp