Inpatient and Outpatient Services from ASC Centers: Journey From Approved To Covered

Ever since their inception, Ambulatory surgery centers (ASCs), have been providing improved quality and customer service to the healthcare industry.  ASCs offer patients the opportunity to have selected surgical and procedural services performed outside the hospital setting. ASC Centers perform more than 7 million procedures for Medicare beneficiaries needing same-day surgical, diagnostic, and preventive procedures. Multisite practices operate nearly 26 percent of ASCs and the remaining 74 percent are stated to be independently owned.

Because ASCs perform specific services and do so more efficiently, Medicare reimburses ASCs as a percentage of the amount paid to HOPDs, and pays ASC centers 53 percent of HOPD rates. A review of commercial medical claims data found that U.S. healthcare costs are reduced by more than $38 billion per year due to the availability of ASCs as an alternative, high-quality setting for outpatient procedures.

The Basic Requirements

Healthcare facilities in the United States are highly regulated by federal and state entities. ASCs are evaluated through three processes: state licensure, Medicare certification, and voluntary accreditation. For most ASCs to operate they need to be licensed and each state has its own rules and regulations and requirements for ASCs to meet for licensure which can include stringent inspection and reporting.

It should be noted that the legal compliance issues that govern ASC reimbursements are complex and dependent on each state’s federal laws.

  • An ASC must be certified and approved to enter into a written agreement with CMS. Participation as an ASC is limited to any distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization and in which the expected duration of services would not exceed 24 hours following an admission.
  • ASCs are not permitted to share space, even when temporally separated, with a hospital or Critical Access Hospital (CAH) outpatient surgery department, or with a Medicare-participating Independent Diagnostic Testing Facility (IDTF). Certain radiology services that are reasonable and necessary and integral to covered surgical procedures may be provided by an ASC; however, it is not necessary for the ASC to also participate in Medicare as an IDTF for these services to be covered.
  • ASCs are subject to a 2 percent decrease in annual payment if they don’t report quality statistics based on the ASC Centers Quality Reporting Program guidelines. The ASCs must meet 11 required and one voluntary measure, or see the reduction applied to CMS reimbursement in 2018.
  • CMS currently doesn’t reimburse for total joint replacement in ASCs, but the Advisory Panel on Hospital Outpatient Payment unanimously recommended CMS remove total knee replacement from the inpatient-only list in 2016. There were at least 16 new procedures added to the CMS ASC payable list for 2016. The new procedures are significant because many private payers base their payment rates on a percentage of Medicare rates, and in some cases, payers are weary of paying for procedures, not on the ASC payable list.
  • Medicare Part B (Medical Insurance) covers the facility service fees related to approved surgical procedures provided in ASC centers
  • For any item to be covered by Medicare, it must
  1. Be eligible for a defined Medicare benefit category,
  2. Be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, and
  3. Meet all other applicable Medicare statutory and regulatory requirements.

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  • Medicare does not automatically assume payment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) item that was covered prior to a beneficiary becoming eligible for the Medicare Fee-for-Service (FFS) program.
  • For an item to be covered by Medicare, a Detailed Written Order (DWO) must be received by the supplier before a claim is submitted. If the supplier bills for an item addressed in this policy without first receiving the completed DWO, the item will be denied as not reasonable and necessary.
  • If an ASC bills a CPT code that is considered to be part of another more comprehensive code that is also billed for the same beneficiary on the same date of service, only the more comprehensive code is covered, provided that code is on the list of ASC-approved codes.
  • Covered ASC services are those surgical procedures that are identified by CMS on a listing that is updated at least annually. Medicare also maintains a more restrictive listing of ASC-approved procedures. This listing excludes not only the “inpatient only” procedures but other procedures that Medicare has determined cannot be safely performed in a non-hospital setting on Medicare beneficiaries.
  • For surgical procedures not covered in ASCs, the related professional services may be billed by the rendering provider as Part B services and the beneficiary is liable for the facility charges, which are non-covered by Medicare.
  • Under Part B, coverage for surgical dressings is limited to primary dressings, i.e., therapeutic and protective coverings applied directly to lesions on the skin or on openings to the skin required as a result of surgical procedures. Although surgical dressings usually are covered as “incident to” a physician’s service in a physician’s office setting, in the ASC setting, such dressings are included in the facility’s service.
  • Outpatient surgeries are reimbursed per the contractual agreement.
  • Observation services related to an ambulatory surgical procedure are considered part of the routine recovery period for the procedure and are included in the reimbursement for the ambulatory surgical procedure.

Staying Tuned In

To have a better understanding of what is approved and covered and what can be reimbursed and under what criteria requires one to be constantly updated with the CMS rules & regulations and changes thereof.

Nearly every quarter some minor and major changes are being made to various ASC policies and payment rates. For instance, beginning with the January 2015 ASC payment system quarterly update change request, one can check out the list of drugs and biologicals with corrected payments rates, for a particular quarter, which have changed, from the CMS website.

Those working in the Coding and billing section are certainly kept on their toes as they need to analyze the physician documentation notes and then code and bill accordingly. Based on the claims, if rejected, the whole process will need to be repeated and substantial proof to be attached.


In all, running ASCs is not an easy task, despite them helping bring down costs for the government and maintain the quality of healthcare. Flexibility but with added responsibilities seems to be the underlying sentiment.

ASC reimbursement as a percentage of hospital outpatient department reimbursement has however seen a steady decline since 2003.

Medical Billers and Coders (MBC) offer complete transparency and control of the ASC revenue cycle along with key analytics, actionable insights, recommendations, and proven strategies. Such offerings will maximize the ASC’s efficiency, profitability, and physician disbursements. To know more about ASC billing and coding contact us at 888-357-3226/