Medicare Reimbursement Basics for ASCs

Posted on 19 Oct, 2017 |comments_icon 5|By Elizabeth

Every November, in a long, wordy Federal Register post, CMS releases Outpatient Prospective Payment System (OPPS) updates, which describe reimbursement policies for hospital outpatient and ASC settings for the following year. On a quarterly basis, CMS revises and releases ASC Addenda, which get down into brass tacks: codes for covered services, short descriptors, and payment rates.

Here is a quick-start guide to the information you can find in ASC Addenda:

  • Addendum AA lists the surgical procedures the Medicare is currently covering in ASC settings. The downloadable file lists more than 3800 procedures and includes HCPCS or CPT® codes for those procedures, short descriptors, payment indicators, payment weights, and whether the code is subject to multiple procedure discounting.
  • Addendum BB lists radiology and other ancillary services that Medicare will cover separately from the surgical procedure—as long as the service is, in CMS’s verbiage, “integral to an ASC covered surgical procedure.”
  • Addenda DD1 and DD2 list and explain payment and comment indicators that show up in Addenda AA and BB. Think of DD1 and DD2 as keys to the shorthand that indicates whether the code is packaged, office-based, device intensive, etc.
  • Addendum EE lists codes excluded from reimbursement in ASC settings. These codes are excluded because they haven’t been approved for Medicare reimbursement or because they represent procedures that must be performed in inpatient settings.

Resource: Download the latest ASC addenda from CMS

How Do Procedures Make Medicare’s ASC Coverage List?

Because so many reimbursement dollars are at stake, the OPPS rule and ASC Addenda are always the subject of vigorous discussions and debates involving CMS, medical societies, and professional associations.

CMS annually reviews codes excluded from the ASC-payable list to determine whether they should be added, explains Kara Newbury, JD, regulatory counsel for the Ambulatory Surgical Center Association.

At ASCA’s recent annual meeting, Newbury explained that, generally, CMS excludes procedures from the ASC payable list if they:

  • Are on the inpatient-only list
  • Involve significant safety risks
  • Are expected to require an overnight stay
  • Involve major blood vessels or prolonged invasion of the body cavity
  • Are expected to result in major blood loss
  • Are emergent or life-threatening
  • Can be reported using only an unlisted surgical procedure code

How Does Medicare Reimbursement Work for ASCs?

For each procedure performed in an ASC, the payer makes a single payment to the ASC. Claims for the physician (and anesthesiology) services are submitted separately to the MAC from the physician’s office, as our claims for related services not covered in the ASC payment, such as durable medical equipment or ambulance services.

The ASC portion of the payment covers items the ASC contributes to make the procedure happen, such as:

  • The patient’s use of the ASC facility and equipment
  • Nursing, clinical technician services, and administrative support
  • Surgical dressings, supplies, casts, and any drugs that don’t qualify for a separate OPPS payment
  • Intraocular lenses (IOLs) for cataract surgeries

Some items and services aren’t included in a procedure’s ASC payment. The ASC may bill for these separately under OPPS if there is medical necessity. Examples include certain drugs, radiology services, brachytherapy sources, implantable devices, and corneal tissue acquisitions.

As another example, if something goes drastically wrong in the ASC and an ambulance is required to transport the patient to the hospital, the ambulance is payable as a separate, ancillary service, offers Amy C. Pritchett, BSHA, CPC, CPC-I, CANPC, CASCC, CEDC, CASCC, CRC, CCS, CDMP, CMPM, ICDCT-CM, ICDCT-PCS, CMRS, C-AHI.

What’s the Difference Between a Procedure Performed in an HOPD vs. an ASC?

When it comes to actual surgeries, there’s not much difference between a surgery performed in a hospital outpatient department (HOPD) and a surgery performed in an ASC.

There are a few patients who don’t get care in ASCs because of certain medical conditions. For example, patients with latex allergies choose HOPDs because few ASCs have latex-free operating rooms, note the authors of Commercial Insurance Cost Savings in Ambulatory Surgery Centers.

Similarly, obese patients (with body mass indexes of 40 or greater) may go to HOPDs for safety reasons. Obese patients tend to be higher risk, so it makes sense for them to be closer than an ambulance ride away from a hospital inpatient department should something go awry during a procedure.

The main difference between HOPDs and ASCs is cost—both to the patient’s own pocket and to the insurer. Calculating the precise cost savings that ASCs can offer is difficult, given case mix and the fact that different ASCs in different regions are paid different amounts.

For example, in Charleston, WV, a cataract surgery performed in an ASC averages $2,932 and the same procedure performed in an HOPD in the same region is $5,762, according to the authors of Commercial Insurance Cost Savings in Ambulatory Surgery Centers.

The report’s authors estimate that between $38-$56 billion could be saved annually if patients went to ASCs for procedures rather than HOPDs. The caveat here is that the authors are from the Ambulatory Surgery Center Association (ASCA) and a group of payer representatives.

Learn More

To capture optimum volume, stay ahead of the cost curve, proactively address payor mix and reimbursement pressures, and secure the ROI you deserve, pick up TCI’s How to Lead Your ASC to Excellence and Profitability: A Guide to Making the Right Decisions for Your Ambulatory Surgical Center



Elizabeth works on an array of projects at TCI, researching and writing about modern reimbursement challenges. Since joining TCI in 2017, she has also covered the nuts and bolts of cybersecurity, compliance with federal laws, and how to tap into the advantages of telehealth services.

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