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A bill that delays implementation of ambulatory payment classifications (APCs) for surgery centers until at least January 2002 is hailed as good news by the freestanding sugery center industry.
The bill frequently is referred to as the "Medicare Give-Back’ Bill" because it is intended to restore funds cut from the program by the Balanced Budget Act of 1997 (BBA). The legislation, which restores $35 billion in reimbursement cuts, also requires the Health Care Financing Administration (HCFA) to implement APCs over a four-year period. Previously, HCFA planned to implement them over a three-year period.
Also, the bill requires HCFA to begin implementing rates based on a more current survey of facility costs in January 2003. "Given that HCFA cannot implement rebased rates until Jan. 1, 2002, and that it is required to then implement rates based on more current data by Jan. 1, 2003, it is likely that HCFA will decide to scrap entirely the rates first proposed in June 1998 and instead begin work on collecting and processing data to implement new rates by 2003," explains Eric Zimmerman, JD, an associate with McDermott, Will & Emery in Washington, DC, and legal counsel to the American Association of Ambulatory Surgery Centers in San Diego.
Leaders in the freestanding surgery center industry say poor data were used as a basis for APCs.
Kathy Bryant, JD, executive director of the Fed-erated Ambulatory Surgery Association in Alexandria, VA, says, "To us, the solution is to get really good data." [For a copy of the bill, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), HR 4577, go to the Web site: thomas.loc.gov.]
The legislation modifies and delays the provider-based requirements. Under the provider-based rules, if a physician practice meets certain criteria and is owned by a hospital, that practice can be designated as "provider-based" and be paid more under hospital outpatient department rates. Here are the highlights of the changes to the provider-based rules:
• Any facility that was treated as provider-based as of Oct. 1, 2000, shall continue to be treated as such for two years, and the criteria used to determine provider-based status, the prohibition against conferring provider-based status upon joint ventures, the requirements applicable to management contracts, and the prohibition against conferring provider-based status on facilities that furnish services under arrangements shall not apply to facilities treated as provider-based before Oct. 1, 2000, until Sept. 30, 2002.
HCFA is interpreting this legislative two-year moratorium as applying only to entities that:
— have a provider-based determination from HCFA;
— can demonstrate through Medicare payment history that HCFA has treated the entity as provider-based.
"It is not enough that the main provider itself regards the entity as provider-based," according to McDermott, Will & Emery in Washington, DC.1
• The legislation provides additional ways in which entities not already treated as provider-based, which must seek a determination under the new regulations, may satisfy the geographic location test required under the regulations.
A subordinate entity may satisfy the geographic location requirement if it is:
— located within 35 miles from the main campus of the hospital;
— owned by a hospital that is a unit of state or local government, is a public or private nonprofit entity that is formally granted governmental powers by a unit of state or local government, or is a private hospital that has a contract with a state or local government to operate off-campus clinics and has a disproportionate share hospital percentage of 11.75 or greater.
"This latter provision appears to be designed to benefit a limited number of providers," McDermott, Will & Emery says.
• The legislation provides that any entity that requests a provider-based status determination between Oct. 1, 2000, and Sept. 30, 2002, shall be treated as provider-based until a determination is made. [Editor’s note: Provider-based information is reprinted with permission of McDermott, Will & Emery in Washington, DC. For further information, contact: Eric Zimmerman, JD. Telephone: (202) 756-8148. E-mail: email@example.com.)]
In other news, HCFA announced it will cover cryosurgery in treating prostate cancer patients when radiation has failed. Cryosurgery uses extremely cold temperatures to freeze and destroy cancer cells in the area of the prostate gland. Patients typically spend one night in the hospital.
1. McDermott, Will & Emery. Health Law Update Dec. 20, 2000; 17(9).