[Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
[Proposed Rules]
[Pages 52663-52665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26249]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 416 and 488

[HCFA-1885-2N]
RIN 0938-AH81


Medicare Program; Update of Ratesetting Methodology, Payment 
Rates, Payment Policies, and the List of Covered Procedures for 
Ambulatory Surgical Centers Effective October 1, 1998; Reopening of 
Comment Period and Delay in Adoption of the Proposed Rule as Final

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice of reopening of comment period for proposed rule and 
delay in adoption of provisions of the proposed rule as final.

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SUMMARY: This notice reopens the comment period for a proposed rule 
affecting Medicare payments to ambulatory surgical centers (ASCs) that 
was originally published in the Federal Register on June 12, 1998 (63 
FR 32290). This document gives notice of a delay in the adoption of the 
provisions of the June 12, 1998 ASC proposed rule as a final rule to be 
concurrent with the adoption as final of the hospital outpatient 
prospective payment system (PPS) that is the subject of a proposed rule 
published in the Federal Register on September 8, 1998 (63 FR 47551). 
In addition this document confirms that the current ASC payment rates 
that are effective for services furnished on or after October 1, 1998, 
will remain in effect until rebased ASC rates and the provisions of the 
June 12, 1998 ASC proposed rule are adopted as final to be concurrent 
with the adoption as final of the Medicare hospital PPS.

DATES: The comment period is reopened to 5 p.m. on November 9, 1998.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-1885-P, P.O. Box 26688, 
Baltimore, MD 21207-5178.
    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses: Room 443-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 
20201, or Room C5-09-26, Central Building, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1885-P. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 443-G of 
the Department's offices at 200 Independence Avenue, SW, Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).
    For comments that relate to information collection requirements, 
mail a copy of comments to: Office of Information and Regulatory 
Affairs, Office of Management and Budget, Room 10235, New Executive 
Office Building, Washington, DC 20503, Attn: Allison Herron Eydt, HCFA 
Desk Officer.

FOR FURTHER INFORMATION CONTACT: Joan H. Sanow (410) 786-5723.

SUPPLEMENTARY INFORMATION: On June 12, 1998, we issued a proposed rule 
in the Federal Register (63 FR 32290) that would--
     Update the criteria for determining which surgical 
procedures can be appropriately and safely performed in an ambulatory 
surgical center (ASC);
     Make additions to and deletions from the current list of 
Medicare covered ASC procedures based on the revised criteria;
     Rebase the ASC payment rates applying cost, charge, and 
utilization data collected by a 1994 survey of ASCs to a clinically 
coherent ambulatory payment classification (APC) system of grouping 
procedures;
     Refine the ratesetting methodology that was implemented by 
a final notice published on February 8, 1990 in the Federal Register;
     Require that ASC payment, coverage, and wage index updates 
be implemented annually on January 1, rather than having these updates 
occur randomly throughout the year;
     Reduce regulatory burden; and
     Make several technical policy changes.
    The proposed rule would also implement requirements of section

[[Page 52664]]

1833(i)(1) and (2) of the Social Security Act (the Act). We indicated 
that comments would be considered if we received them by August 11, 
1998.
    Representatives of numerous industry and professional associations 
and organizations requested additional time to analyze the June 12, 
1998 ASC proposed rule to determine its impact on ASCs, physician 
practices, and hospitals and to allow comparison of the ASC proposed 
rule with the outpatient PPS rule. We agreed to extend the comment 
period an additional 30 days, to September 10, 1998.
    Members of trade and professional associations also strongly urged 
us to postpone implementing the changes contained in the June 12, 1998 
ASC proposed rule from October 1, 1998 to January 1, 1999, to coincide 
with implementation of the hospital outpatient prospective payment 
system (PPS) authorized by the Balanced Budget Act of 1997. They based 
their argument for delaying implementation of the ASC changes both on 
the need for more time for cross-analysis of the ASC proposed rule with 
the hospital outpatient PPS proposed rule and the overlap and 
interrelationship between the two payment systems.
    On September 8, 1998, a proposed rule outlining the provisions of a 
Medicare prospective payment system for hospital outpatient services 
was published in the Federal Register (63 FR 47551).
    The ambulatory payment classification (APC) system introduced in 
the June 12, 1998 ASC rule is the same classification system we used to 
set rates that are proposed for surgical services in the September 8, 
1998 hospital outpatient PPS rule. In both rules, we explicitly propose 
a method of setting payment rates for ASC services and for hospital 
outpatient surgical services that is as consistent as possible, within 
the constraints imposed by statutory requirements. When we drafted 
these proposed rules, we did so with the intent of using APC groups as 
the basis for setting payment rates for surgical services furnished at 
ASCs to coincide with using APC groups as the basis for prospectively 
setting payment rates for surgical services furnished in hospital 
outpatient settings. We assumed that implementation of APCs and the 
other provisions of the June 12, 1998 ASC proposed rule would be 
approximately concurrent with implementation on January 1, 1999 of a 
hospital outpatient prospective payment system and would replace the 
payment blend required for hospital services under the provisions of 
section 1833(i)(3) of the Act.
    However, when we projected these implementation dates, we did not 
take into account the emergent challenges posed by year 2000 issues 
that are now compelling us to delay implementation of some Medicare 
program changes in order to assure that health care services for 
Medicare beneficiaries are not affected by computer failures on January 
1, 2000. The outpatient PPS is one of the program changes affected by 
HCFA's Millennium (``Y2K'')compliance project, and, as we explain in 
the September 8, 1998 proposed rule, the outpatient PPS is now 
scheduled for implementation as soon as possible after January 1, 2000.
    Given the delay in publication of the hospital outpatient PPS 
proposed rule and our having to postpone for a year or more 
implementation of the hospital outpatient PPS; given our efforts to 
relate to the maximum possible extent the provisions of the June 12, 
1998 ASC proposed rule with the new hospital outpatient PPS; and given 
the concerns expressed by members of trade and professional 
organizations about the financial and systems impact of implementing 
the provisions of the June 12, 1998 ASC proposed rule separately from 
implementing the hospital outpatient PPS, we have decided upon the 
following course of action.
     We are reopening the comment period for the ASC proposed 
rule. The comment period for the ASC proposed rule published on June 
12, 1998, entitled ``Medicare Program; Update of Ratesetting 
Methodology, Payment Rates, Payment Policies, and the List of Covered 
Surgical Procedures for Ambulatory Surgical Centers Effective October 
1, 1998'' (HCFA-1885-P), is hereby reopened until 5:00 pm on November 
9, 1998, concurrent with the end of the comment period for the hospital 
outpatient PPS proposed rule that was published on September 8, 1998.
     There is considerable, intentional overlap between the 
payment system for surgical services contained in the June 12, 1998 ASC 
proposed rule and the payment system for surgical services contained in 
the September 8, 1998 hospital outpatient PPS proposed rule. We 
envisioned that implementation of the former would coincide with 
implementation of the latter. Hospitals are concerned about the impact 
on their systems of implementing APCs for ASCs without their also 
implementing APCs for hospital outpatient services. Given the overlap 
and close relationship between the two payment systems, and the unknown 
effect of implementing the changes proposed in the June 12, 1998 notice 
for ASCs, without concurrently implementing the changes proposed in the 
September 8, 1998 hospital outpatient PPS notice, we are delaying 
implementation of the provisions of the June 12, 1998 ASC proposed rule 
until such time as the provisions of the September 8, 1998 hospital 
outpatient PPS proposed rule are implemented. This means that 
implementation of the rebased ASC rates using 1994 ASC survey data, of 
the APC groups, of the additions to and deletions from the ASC list, 
and of the other technical policy and regulatory changes proposed in 
the June 12, 1998 are all deferred, pending implementation of the 
hospital outpatient PPS as early as possible after January 1, 2000.
     During years in which the Secretary has not otherwise 
updated ASC rates based on a survey of actual audited costs, section 
1833(i)(2)(C) of the Act requires application of an inflation 
adjustment. Section 4555 of the Balanced Budget Act of 1997 amends 
section 1833(i)(2)(C) of the Act to require that the inflation 
adjustment be the percentage increase in the consumer price index for 
all urban consumers (CPI-U) as estimated by the Secretary for the 12-
month period ending with the midpoint of the year involved, reduced 
(but not below zero) by 2.0 percentage points in each of the fiscal 
years 1998 through 2002. Based on estimates prepared by Data Resources, 
Inc./McGraw Hill, the rate of increase in the CPI-U forecast for the 
fiscal year that ends March 31, 1999 is 2.1 percent. Reducing the CPI-U 
factor by 2.0 percentage points results in an adjustment factor of 0.1 
percent. Because applying this factor to the current ASC rates yields a 
negligible change of less than $1 for each of the payment groups, we 
elected to keep the current ASC rates in effect for services furnished 
on or after October 1, 1998 and until rebased ASC rates and other 
provisions of the June 12, 1998 ASC proposed rule are implemented to be 
concurrent with implementation of the hospital outpatient PPS. The ASC 
payment rates for services furnished on or after October 1, 1998 are as 
follows. These rates remain in effect until rebased ASC rates are 
implemented concurrent with implementation of the hospital outpatient 
PPS.

Group 1--$314
Group 2--422
Group 3--482
Group 4--595
Group 5--678
Group 6--789 ($639+$150 for IOL)
Group 7--941
Group 8--928 ($778+150 for IOL)


[[Page 52665]]


     Carriers will continue using the same fiscal year 1998 
wage index values that they are using currently to standardize ASC 
payment rates for wage differences, for services furnished on or after 
October 1, 1998 and until rebased ASC rates are implemented to be 
concurrent with implementation of the Medicare outpatient PPS.
     Additions to and deletions from the ASC list (other than 
procedure codes deleted by the American Medical Association from 
Physicians' Current Procedural Terminology (CPT)) are deferred until 
APC groups are implemented as the basis for setting payment rates for 
ASC services, to be concurrent with implementation of APC groups under 
the hospital outpatient PPS proposed in the September 8, 1998 Federal 
Register.

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

(Catalog of Federal Domestic Assistance No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: September 10, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: September 22, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-26249 Filed 9-30-98; 8:45 am]
BILLING CODE 4120-01-P