Ambulatory Surgery Centers – Medicare Rules Don’t Apply

When the Centers for Medicare & Medicaid Services (CMS) formalized CMS-4201-F with an effective date of Jan. 1, 2024, there was great relief within the utilization review (UR) community, as this rule requires Medicare Advantage (MA) plans to follow the provisions of 42 CFR § 412.3, the Two-Midnight Rule.

Included within that section of the Federal Register is the provision at 42 CFR § 412.3 (d)(2) that the Inpatient-Only List (IPO) also must be honored by MA plans. In other words, they can no longer deny inpatient admission for patients undergoing a surgery whose HCPCS code is included on Addendum E of the yearly Outpatient Prospective Payment System (OPPS) Final Rule. They also are required to follow the case-by-case exception delineated at 42 CFR § 412.3 (d)(3) and allow inpatient admission for patients undergoing a surgery not on the IPO when the physician determines that inpatient admission is warranted based on the patient’s history and comorbidities, the severity of signs and symptoms, and the risk of an adverse event.

But what is not addressed in CMS-4201-F is surgery performed at ambulatory surgery centers (ASCs). CMS has established the Ambulatory Surgery Center-Covered Procedure List (ASC-CPL), found in the yearly OPPS Final Rule as addendum AA. These surgeries, delineated by HCPCS code, are those that CMS has determined, based on 42 CFR § 416.166, “would not (be) expected to pose a significant safety risk to a Medicare beneficiary when performed in an ASC, and for which standard medical practice dictates that the beneficiary would not typically be expected to require active medical monitoring and care at midnight following the procedure.” 42 CFR § 416.2 also addresses surgeries permitted at ASCs, noting that ASCs operate “exclusively for the purpose of providing surgical services to patients not requiring hospitalization and in which the expected duration of services would not exceed 24 hours following an admission.”

Although not the primary topic of this article, it is interesting to note the ambiguity in the expected length of stay at an ASC, with one section noting expected discharge prior to midnight and another section noting a duration not to exceed 24 hours.

The Interpretive Guidelines state that “patients admitted to an ASC will be permitted to stay 23 hours and 59 minutes, starting from the time of admission … the regulatory language refers to surgical services whose ‘expected duration’ does not exceed 24 hours. It is possible for an individual case to take longer than expected, due to unforeseen complications or other unforeseen circumstances.”

Prior to CMS-4201-F, it appeared to be CMS policy that MA plans were free to determine, in conjunction with the surgeon, the most appropriate location for a surgery, be it at the hospital, in an ASC, or even in the physician office.

As stated by Humana in a 2017 memo, “the Centers for Medicare and Medicaid Services (CMS) shared with Humana that the current (IPO) applies to traditional Medicare, but not Medicare Advantage (MA). That may be good news for you. Humana-covered MA patients may now go to outpatient facilities and ambulatory surgical centers for 145 procedures that were previously on the CMS (IPO).”

Humana’s list of surgeries they would allow at ASCs included multiple surgeries that were in 2017 on the IPO, including joint arthroplasty, hip fracture repair, multiple spine procedures, bariatric surgery, radical prostatectomy, and more.

The adoption of CMS-4201-F now closes the IPO loophole, requiring MA plans to approve inpatient admission for surgeries on the list and forbidding them from approving those surgeries only as outpatient (or requiring that they be performed at an ASC).

But it appears that MA plans face no regulatory obstacles to approving surgeries not on the IPO to be performed at ASCs, even if those surgeries are not on the ASC-CPL. For example, lumbar spine fusion, HCPCS code 22630, which is not on either the IPO or the ASC-CPL, and therefore would not be allowed at an ASC for a traditional Medicare patient, can be performed at an ASC on an MA patient if the surgeon deems it appropriate and the surgery can be safely performed in a non-hospital setting.

When CMS-4201-F was finalized, it is likely that many hospitals forecast for 2024 an increase in the number of inpatient surgeries – and the resultant increase in revenue. While there will be a significant increase, the expectation that most significant surgeries that had shifted to ASCs over the last five years will return to the hospital may have led to overestimations because of the continued ability of MA plans to shift a significant number of surgeries not on the ASC-CPL to ASCs. In addition, the ability to potentially monitor patients in an ASC for up to 24 hours can also increase the ASC surgical volume, as MA plans double down on efforts to shift care out of hospitals and work with ASCs and surgeons.

What will be the impact? It will vary by payor and by region. For areas with ASCs that have significant ownership by surgeons, they may favor performing surgeries at “their” ASC, as they have much more control over scheduling and operations. In addition, they will be paid their professional fee and be able to share in the facility profits.

For areas with health system-employed surgeons, the surgeries will likely remain at the hospital, but convenience and patient satisfaction may lead some to move some surgeries to ASCs.

Time will tell how this plays out.