Nov. 13 webinar: Get a detailed analysis of the 2020 HOPPS final rule

The proposed updates have the potential to incentivize ASC growth in three ways.

1. ASCs will become more financially attractive for health systems

In the CY 2019 HOPPS rule, CMS changed the methodology for updating annual ASC payment rates, switching to the hospital market basket update, which resulted in a higher overall payment increase.

Your ASC services outlook primer

For 2020, CMS proposes continuing the new methodology, with an ASC rate increase of 2.7%, which is equivalent to the update rate for hospital outpatient departments (HOPDs). This decision indicates a commitment by CMS to improving ASC payment and reducing payment discrepancies among the same services performed at HOPDs and ASCs. This movement toward payment parity will make ASCs more attractive to health systems, likely encouraging the shift of services to lower-cost setting ASCs.

2. New services will move to the ASC

CMS proposed the addition of eight new codes for the ASC Covered Procedures List (CPL) in 2020, including Total Knee Arthroplasty (TKA) and three additional coronary intervention procedures. 

If these procedures are approved for the ASC setting, hospitals face the risk of losing cases to independent physicians who may decide to take the procedures out of the health system entirely. With 83% of ASCs at least partially owned by physicians, independent physicians have ample opportunity and incentive to take procedures to freestanding sites.

Organizations should respond by assessing the appropriateness of building an ASC or entering a joint venture to retain cases in the health system.

3. Added quality reporting metrics may help ease ASC safety concerns

To receive the full annual update to the ASC annual payment rate, ASCs have to report quality of care data for standardized measures in the ASC Quality Reporting Program (ASCQR).  For 2020, CMS proposes the addition of "Facility-Level 7-Day Hospital Visits after General Surgery Procedures Performed at Ambulatory Surgical Centers" for 2024 payment determinations. 

While the addition of this individual quality metric is unlikely to have significant impact in the near term, it is indicative of a broader trend toward increased quality requirements and patient safety prioritization.