On September 8, 1998, the Health Care Financing Administration ("HCFA") introduced proposed regulations establishing a prospective payment system for hospital outpatient department services. This payment system would create a set facility fee prospective payment for groups of hospital outpatient services similar to the system proposed for Ambulatory Surgery Centers ("ASCs"). Under the proposed hospital outpatient rule, HCFA suggested a rate of $2,235.74 for CPT code 50590 for lithotripsy. The American Lithotripsy Society ("ALS") believes this rate is too low.

As is permitted with a proposed rule, ALS filed extensive formal, written comments with HCFA. In its comments, ALS explained to HCFA why the rate was too low and provided data showing that the costs of lithotripsy provided in a hospital outpatient setting are significantly higher. ALS filed consistent comments on the proposed ASC rates.

On April 7, 2000, HCFA published the final rates for hospital outpatient services which are scheduled to become effective August 1, 2000. The rates were supposed to be implemented on July 1, 2000, but several hospital associations asked HCFA to extend the effective date. The same associations are requesting that HCFA further delay implementation, but HCFA has yet to agree to another extension.

Despite ALS' extensive comments and voluminous data, HCFA set a final payment rate for lithotripsy provided in hospital outpatient departments at $2,265.32. ALS believes that in setting this rate, HCFA failed properly to consider the costs of providing lithotripsy and that HCFA's methodology for setting the payment rate is inconsistent with the statutory mandates of Congress.

ALS analyzed the possibility of bringing a lawsuit against HCFA to prevent the implementation of this payment rate for lithotripsy and to require HCFA to set a proper rate. However, the law which grants HCFA the authority to establish the hospital outpatient rates specifically prohibits any judicial or administrative challenge to HCFA's rates or methodology. This prohibition likely precludes a court challenge by ALS. We have examined other potential avenues of challenge and filed a Freedom of Information Act ("FOIA") request demanding that HCFA turn over the data on which HCFA relied in setting a payment rate for lithotripsy. To date, HCFA has not produced the information requested. We are currently exploring other options and pledge to keep you informed.

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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