Medicare Payment Policy

• Capacity and supply of providers—From 2006 through 2010, the number
of Medicare-certified ASCs grew by an average annual rate of 3.6 percent.
However, the growth slowed to 1.8 percent in 2011. The relatively slow growth
may reflect the substantial revision of the ASC payment system in 2008 (see
online Appendix A from Chapter 2C of our March 2010 report at http://www.
medpac.gov/chapters/Mar10_Ch02C_APPENDIX.pdf), and investors may
have been responding to the large changes in payment rates that occurred under
that revision. In addition, Medicare payment rates for most ambulatory surgical
services have become much higher in hospital outpatient departments (HOPDs)
than in ASCs—for 2013, the Medicare rates are 78 percent higher in HOPDs
than in ASCs. This payment difference may have led some ASC owners to sell
their facilities to hospitals. Finally, physicians have increasingly been selling
their practices to hospitals and becoming hospital employees. Physicians who
are hospital employees may be more inclined to provide surgical services at
hospitals than at ASCs.
• Volume of services—From 2006 through 2010, the volume of services per
beneficiary grew by an average annual rate of 5.7 percent; in 2011, volume
increased by 1.9 percent.
Quality of care—Although CMS has established a program for ASCs to submit
quality data, ASCs did not begin doing so until October 2012. Consequently, we do
not have sufficient data to assess ASCs’ quality of care.
Providers’ access to capital—Because the number of ASCs has continued to
increase, they appear to have adequate access to capital.
Medicare payments and providers’ costs—From 2006 through 2010, Medicare
payments per FFS beneficiary increased at an average annual rate of 5.1 percent
but slowed to 2.2 percent in 2011. ASCs do not submit data on the cost of services
they provide to Medicare beneficiaries. Therefore, we cannot calculate a Medicare
margin as we do for other provider types to assist in assessing payment adequacy. ■
106 Ambulatory surgical center services: Assessing payment adequacy and updating payments