Ambulatory Surgical Centers

Understand Payment Rates and Basics of ASC Billing

An Ambulatory Surgical Center (ASC) is defined by CMS as a facility with the sole purpose of providing outpatient surgical services to patients. ASC is a facility that, very simply, specializes in outpatient procedures. Procedures done at an ASC are more extensive than those done at the typical provider’s office but are not so involved that they require a hospital stay. For ASC services to be paid, the service must be determined to be medically necessary.

Generally, there are two primary elements in the total cost of performing a surgical procedure:

  • The cost of the physician’s professional services for performing the procedure
  • The cost of services furnished by the facility where the procedure is performed (for example, surgical supplies and equipment, and nursing services).

In general, the Medicare program pays ASCs 80 percent of the lesser of the actual charge or the ASC facility payment rate for the covered services performed. The beneficiary pays 20 percent of the lesser of the submitted charge or the ASC facility payment rate for the covered services performed. Payment rates for most services are geographically adjusted using the pre-reclassification wage index values that CMS uses to pay non-acute providers. The adjustment for geographic wage variation will be made based on a 50 percent labor-related share.

Ambulatory surgical center claims are filed to Medicare, Medicare Advantage Plans, and Medicaid on an HCFA 1500 or the 837P. This is different from hospital outpatient surgery claims to the payers, which are filed on the UB-04 or the 837I. The CMS-1500 is the red-ink on white paper standard claim form used by physicians and suppliers for claim billing.

Any non-institutional provider and supplier can use the CMS-1500 for billing medical claims. The electronic version of the CMS-1500 is called the 837-P, the P standing for the professional format. The UB-04 or 837-I is used by ASCs to file medical claims to all other payers. When submitting claims on a UB-04, the revenue code used to report ambulatory surgical center procedures is 490.

While ASC claims have some similarities to hospital claims when it comes to billing, there are some very distinct differences. When submitting claims on the UB-04, the bill type for ASC claims is 83X. The first digit refers to the type of facility: 8 – Specialty Facility, Hospital ASC Surgery The second digit refers to the bill classification: 3 – Outpatient. The third digit refers to the frequency which is represented above by the variable X. 1 – Admit through discharge claim; 7 – Replacement of prior claim or corrected claim; 8 – Void or cancel of a prior claim

Examples of covered ASC facility services are:

  • Nursing services, technical personnel furnished services, and other related services
  • Drugs and biologicals for which Medicare makes no OPPS separate payment; surgical dressings; supplies; splints; casts; appliances; and equipment
  • Administrative, recordkeeping, and housekeeping items and services
  • Blood, blood plasma, and platelets, except when the blood deductible applies
  • Materials for anesthesia
  • Intraocular lenses
  • Implantable devices, except devices with OPPS pass-through status
  • OPPS-packaged radiology services

Medicare pays ASCs separately for covered ancillary services integral to a covered surgical procedure, such as certain services furnished immediately before, during, or immediately after the procedure.

Covered ancillary services include:

  • Certain drugs and biological
  • Radiology services integral to the surgical procedure
  • Brachytherapy sources
  • Implantable pass-through status devices
  • Corneal tissue acquisition

Payment Rates:

CMS sets annual ASC Payment System updates using relative payment weights equal to OPPS relative payment weights for the same services and then scales the ASC weights to maintain budget neutrality from year to year. CMS scales ASC relative payment weights to eliminate any difference in the total payment weight between the current and upcoming CY by:

  • Holding ASC use and mix of services constant from the most recent full-year claims data available
  • Comparing the covered ASC surgical procedures and separately payable ancillary services total payment weight using the current CY’s ASC relative payment weights to the total payment weight using the applicable upcoming CY OPPS relative payment weights

The ratio of the current CY to the upcoming CY total payment weight is the weighted scalar. It is applied to the upcoming CY relative payment weights to maintain budget neutrality. CMS annually adjusts the ASC conversion factor (CF) for budget neutrality by removing the effects of changes in wage index values for the upcoming year compared to the current year and makes a productivity adjustment. The productivity adjustment reduces the ASC Payment System annual update factor.

In the past, absent another update factor, CMS updated the ASC CF using the Consumer Price Index for All Urban (CPI-U) Consumers. However, beginning CY 2019 through 2023, CMS is updating the ASC payment system using the hospital market basket update. ASCs receive the lesser of the actual charge or the ASC payment rate for each procedure or service. CMS sets the standard ASC covered surgical procedures payment rate using the ASC CF and the ASC relative payment weight product for each separately payable procedure or service.

CMS establishes alternate payment methods for office-based procedures, device-intensive procedures, covered ancillary radiology services, and drugs and biologicals. CMS makes a geographic payment adjustment to covered surgical procedures and certain covered ancillary services using the pre-floor and pre-reclassified hospital wage index values, with a labor-related factor of 50 percent.

CMS makes an additional adjustment when the ASC furnishes multiple surgical procedures in the same encounter or when ASC personnel discontinue procedures prior to their initiation or the administration of anesthesia.

The following table provides information on alternate methods to establish payment rates for some surgical procedures and ancillary services:

Surgical Procedure/Ancillary Service

Payment Method

Office-Based Procedures in Physicians’ Offices at Least 50 Percent of the Time that CMS Classifies “Office-Based” Paid at the lower of the ASC rate or the non-facility practice expense (PE) relative value unit (RVU) amount of the Medicare Physician Fee Schedule (PFS) for the relevant year.
Device-Intensive Procedures (ASC-Covered Surgical Procedures When the Estimated Device Offset Percentage Is Greater Than 30 Percent of the HCPCS Code’s Mean Cost) Paid with the device-related portion of the procedure (Medicare pays an ASC and OPPS the same amount) and a service portion (calculated according to the standard rate-setting method).
Separately Payable Covered Ancillary Radiology Services Facility Costs Paid at the lower of the ASC rate or the technical component or non-facility PE RVU amount of the Medicare PFS for the same year (whichever applies).
Separately Payable OPPS Drugs and Biologicals Paid at the same amount as OPPS
Brachytherapy Sources Paid at the same amount as OPPS rates if a prospective OPPS rate is available. Otherwise, Medicare pays at contractor-priced rates. There is no payment adjustment for geographic wage differences.



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