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HRD-84-67 1 (1984-07-12)

handle is hein.gao/gaobabnls0001 and id is 1 raw text is: . )WASHINGTON, D.C. 20548 HUMAN RESOURCES July .12, 1984 DIVI$IONI Carolyne K. Davis, Ph.D., Administrator 111111 Health Care Financing Administration Department of Health and Human Services I Dear Dr. Davis: 125078 Subject: Payment Rates For Ambulatory Surgery Centers Are Higher Than Intended By The Health Care Financing Administration (GAO/HRD-84-67) The Omnibus Reconciliation Act of 1980 (Public Law 96-499) authorized payments under Medicare to ambulatory surgical centers (ASCs) to cover their operating costs. The amount of payments-- called standard overhead amounts--was to be based on the Department of Health and Human Services' estimate of the costs generally incurred by ASCs in furnishing services in connection with ambulatory surgery. Also, the standard overhead amounts were to be set at a level that would assure that the Medicare cost of services in ASCs would be substantially less than the costs of the surgeries if performed on a hospital inpatient basis. Although the Health Care Financing Admini-stration (HCFA) established the stindard overhead amounts at levels that appear to be saving iMedicare dollars, it set the amounts at higher levels than it intended. This resulted because HCFA based the payment amounts on charges without making an intended adjustment which would have- reduced the charges to costs. Because of this, the payment amounts are 10 percent higher than intended by HCFA. In addition, HCFA said when it established the ASC payment rates that the data used was quite limited and t-aT. it intended to revise the rates when better data was available. We believe that better data should now be available and that HCFA should begin the process of re-evaluating the rates. PAYMENT RATES WERE BASED ON CHARGES, NOT COSTS Wnen the ASC benefit was enacted by the Congress, HCFA had little data on which to base payment rates for it. Therefore, HCFA sought information on ASCs through the Freestanding Ambulatory Surgery Association, a trade group representing ASCs, and other interested parties. HCFA obtained 35 charge schedules from ASCs and used these to compute national average charges for procedures performed in ASCs and to categorize procedures into 4 croups. -Ft. 's payment methodology called for reducing the charae-based amounts to cost-based amounts by applying an estimatec national average cost-to-charge ratio of 90 percent. (i06254)

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