August 16, 2000

The ALS' Response to the AUA's Potentially Harmful Letter to HCFA

It is with great disappointment that we report that on July 24, 2000, the American Urological Association ("AUA") sent a letter to the Health Care Financing Administration ("HCFA") seeking interim approval of the proposed $2,107 payment rate for lithotripsy provided in an ambulatory surgery center ("ASC"). The AUA's letter is attached. The AUA is concerned that if the final Physician Self-Referral Law ("Stark II") regulations do not provide an exception for lithotripsy, the lack of an ASC payment rate could jeopardize Medicare beneficiaries' access to lithotripsy.

While the AUA notified the American Lithotripsy Society (the "ALS") of its intent, the AUA refused to collaborate with the ALS and did not provide a copy of the letter until after it was sent. We were shocked and dismayed by the content of the letter and believe that the AUA's position is damaging to lithotripsy providers and Medicare beneficiaries. The ALS responded by sending its own letter to HCFA to correct the misconceptions and damaging statements made by the AUA and urge that HCFA not heed the AUA's advice. The ALS' letter to HCFA is also attached.

We are all anxious for lithotripsy to be covered in an ASC. However, the ALS has steadfastly opposed and successfully prevented the promulgation of an inadequate payment rate. If HCFA sets the payment rate at $2,107, as proposed, such an inadequate rate may itself jeopardize Medicare beneficiaries' access to lithotripsy as providers may not be able to provide the procedure for such a low rate. Settling for this rate in the short term could provide more damage to lithotripsy providers, and consequently Medicare beneficiaries, in the long run.

The AUA itself recognized the inadequacy of the proposed ASC payment rate of $2,107. In its comments to HCFA in June 1999, formulated in consultation with the ALS, the AUA stated that it was "concerned that HCFA arrived at ESWL's payment level of $2,107 using inappropriate utilization assumptions, making the rate particularly inadequate for physicians who work in rural areas." The AUA specifically recommended that HCFA use the Moore Group Cost Study rate, commissioned by the ALS, of $2,345 "adjusted for inflation to arrive at a fair payment for ESWL." Now, in an astonishing and inexplicable reversal which undermines the ALS' and the AUA's own comments to the proposed ASC regulations, the AUA is specifically endorsing and advocating the $2,107 payment rate. The AUA does not ask HCFA to implement an adequate payment rate in the interim, it specifically requests the approval of the $2,107 payment rate.

In 1991, the AUA supported a rate of $1,150 for lithotripsy provided in an ASC. Against the advice of the AUA, the ALS vigorously fought the rate and was successful in obtaining an injunction against HCFA. That injunction still stands. For the last nine years lithotripsy providers have received significantly higher and more appropriate payment rates for lithotripsy. Conservative calculations show that the industry saved $250 million in Medicare payments alone. Since Medicare makes up approximately 20% of the lithotripsy population, a significant multiple of that was saved in private pay whose rates would have been adversely affected by Medicare's lower rate. Now, again, the AUA is advocating an inappropriate and insufficient payment rate for lithotripsy. We fear that the AUA is dominated on fiscal matters by academic naivete. We hope it is not attempting to trade HCFA the interests of clinical practitioners for greater benefits for academic medicine.

Moreover, there should be no connection between Stark and the ASC final rule. The AUA's attempt to link the two regulations and its suggestion that the implementation of an ASC payment rate for lithotripsy will eliminate the need for a lithotripsy exception under Stark II final regulations, further harms lithotripsy providers. If HCFA accepts the AUA's "solution", any physician-owned lithotripsy ventures would be caught-up under Stark II. This means such arrangements would have to comply with a Stark II exception to allow physicians to refer patients to their own lithotripsy facilities. We believe this linkage by the AUA could result in harmful outcomes for lithotripsy providers under both the ASC and Stark II final regulations.

Finally, if the ASC rate is implemented in the interim, Medicare would only pay for lithotripsy provided in a Medicare-certified ASC. The requirements to become a Medicare-certified ASC are burdensome and costly and likely exclude all mobile lithotripsy providers. In addition, the approval process is extremely lengthy and subject to extensive delays because neither HCFA nor the states have adequate survey and certification capability.

The ALS will never advocate or support a payment rate which is inadequate to reimburse providers for the costs of the procedure and which, itself, will threaten Medicare beneficiaries' access to lithotripsy. Nor will the ALS willingly accede to a determination by HCFA that lithotripsy may be a Stark "designated health service" in direct contravention of Congress' intent. The ALS will do all in its power not to allow HCFA to short cut its obligations by improperly linking two unrelated regulations causing an undesirable result under both regulations. Unfortunately, it seems the AUA misunderstands the detrimental and far-reaching consequences of the positions its advocating.

The ALS thought it necessary to inform you of the AUA's actions and respond to HCFA on your behalf.

We will alert you to any developments.

Very truly yours,

Paul W. F. Coughlin, M.D.


Visit us again to receive up-to-the-minute reports on major issues such as the Health Care Finance Administration's (HCFA) proposed implementation of the Stark II (Physician Ownership) regulations and HCFA's proposed rates for lithotripsy performed in/out patient and ambulatory surgical center settings.

For additional information contact, Wesley E. Harrington, CAE, Executive Director of ALS at American Lithotripsy Society, 305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088


American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088

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