Under the revised system, Medicare will make separate payment for covered ancillary services, such as radiology services and some drugs and biologicals that are provided integral to covered surgical procedures. Medicare will also provide separate payment to ASCs for the brachytherapy sources that are implanted through surgically placed needles in the treatment of prostate cancer. In addition, Medicare will make payment adjustments for those ASC procedures with high device costs which ensure that the ASC payment includes the same payment for an implantable device as when the procedure is performed in a hospital outpatient department. Procedures with high device costs are those in the OPPS for which the cost of the device equals or exceeds 50 percent of the median cost of the APC.

The ASC payment system will be updated annually through proposed and final rulemaking in close association with updates to the OPPS and the MPFS. The ASC payment rates in the CY 2008 OPPS/ASC proposed rule are based upon the policies of final ASC rule, updated to comport with the proposed OPPS APC recalibration and proposed OPPS payment policies for CY 2008.


The final CY 2008 ASC payment rates will be published in the OPPS/ASC final rule in November 2007, some of which will be incrementally phased in over a four year transition period, with their full implementation in CY 2011. In addition, CMS will account for geographic wage variation in individual ASC payments by applying the wage index to 50 percent of the ASC payment.

Proposed 2008 Policy And Payment Changes For HOPDs and ASCs

Prior to the implementation of the OPPS, beneficiary coinsurance for hospital outpatient services often resulted in beneficiary responsibility for more than half of the actual payment for the HOPD services. In the CY 2008 proposed rule, beneficiary liability under the OPPS would continue to be reduced under a formula that is designed to provide a gradual transition to 20 percent coinsurance. Based on the proposed rule, the aggregate beneficiary liability is estimated to be 26 percent of the total payment, and almost 3100 services (or 23 percent of all types of services billed under the OPPS) would meet the target coinsurance of 20 percent, increased from about 2600 (or 19 percent of all types of services) in CY 2007.

The proposed rule includes a 3.3 percent inflation update in Medicare payment rates for services paid under the OPPS for CY 2008. CMS projects that hospitals would receive $34.9 billion in CY 2008 for outpatient services furnished to Medicare beneficiaries under the proposed rule. The proposed changes would affect outpatient services furnished by general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children's hospitals, and cancer hospitals.

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