Payment Rates for Ambulatory Surgery Centers Are Higher Than Intended by HCFA

HRD-84-67: Published: Jul 12, 1984. Publicly Released: Jul 12, 1984.

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GAO examined the methodology used by the Health Care Financing Administration (HCFA) for establishing the standard overhead amounts to be paid to ambulatory surgery centers (ASC) and compared the cost to Medicare for surgery performed in ambulatory versus inpatient settings.

The Omnibus Reconciliation Act of 1980 authorized payments under Medicare to ASC to cover their operating costs. The payment amounts, called standard overhead amounts, were to be based on HCFA estimates of the costs generally incurred by ASC in furnishing services in connection with ambulatory surgery. Also, the standard overhead amounts were to be set at a level that would ensure that the Medicare costs of services in ASC would be substantially less than the costs of the surgeries if performed on a hospital inpatient basis. GAO found that HCFA set standard overhead amounts for ambulatory surgery that appear to save Medicare program dollars. However, in computing the standard overhead amounts, HCFA did not adjust charge data by the cost-to-charge ratio as intended. As a result, the standard overhead amounts are 10-percent higher than intended. GAO believes that better data should now be available than the limited information HCFA had when it established ASC payment rates. HCFA should begin the process of reevaluating the rates.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA established new payment rates on March 12, 1990.

    Recommendation: The Administrator, HCFA, should recompute ASC payment rates to incorporate the cost-to-charge adjustment.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  2. Status: Closed - Implemented

    Comments: HCFA developed and distributed a data collection form to gather the data which were used to compute new payment rates that were effective on March 12, 1990.

    Recommendation: The Administrator, HCFA, should obtain more complete and current data on ASC costs and develop payment rates from it.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

 

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