Direct Answer
Ambulatory Surgery Centers bill facility fees on the UB-04 claim form using a Medicare payment system that groups covered surgical procedures into ASC payment groups. The ASC facility fee is separate from — and in addition to — the surgeon's professional fee and the anesthesiologist's professional fee, which are billed separately on CMS-1500 claims. The ASC payment system packages most supplies, medications, and services into the procedure payment, with specific exceptions for certain implants and device-intensive procedures. ASC billing compliance requires understanding which procedures are covered under the Medicare ASC benefit, what is packaged vs. separately payable, and how to correctly code and bill the facility claim.
Table of Contents
ASC Payment System
The Medicare ASC payment system was substantially revised effective January 1, 2008 to align with the Hospital Outpatient Prospective Payment System (OPPS): How Medicare pays ASCs: each covered ASC surgical procedure is assigned to an ASC payment group; the ASC payment rate for each procedure is set at 65.6% of the OPPS APC (Ambulatory Payment Classification) rate for the same procedure; the 65.6% rate reflects a policy judgment that ASC overhead costs are lower than hospital outpatient costs; rates are updated annually via the Medicare Physician Fee Schedule final rule and ASC payment system update; What is packaged into the ASC facility rate: the ASC payment rate includes most items and services related to the surgical procedure: nursing services; anesthesia services provided by the ASC (not the anesthesiologist — that is billed separately); drugs, biologicals, and medical/surgical supplies (unless separately payable); use of the procedure room and recovery area; routine recovery services; What is NOT packaged (separately payable at an ASC): certain high-cost implants and devices (pass-through payments); brachytherapy sources; certain drugs and biologicals meeting the separately payable criteria; certain ancillary services (diagnostic X-rays, diagnostic lab); ASC payment for office-based procedures: CMS designates certain procedures as "office-based" — procedures typically performed in a physician office that happen to be performed in an ASC; office-based procedure rates are capped at the lower of the ASC rate or the non-facility practice expense component of the physician fee schedule; Multiple procedures at ASC: for multiple surgical procedures at the same ASC encounter, Medicare applies a multiple procedure discount: the highest-paying procedure is paid at 100%; the next procedures are paid at 50% of their ASC rate; this mirrors the multiple procedure rule for physician billing; No-pay visits: if an ASC procedure is cancelled after the patient is already in the facility (equipment failure, patient deterioration pre-incision), a no-pay visit may be billed to document the encounter without payment.
Covered vs. Excluded Procedures
Not every surgical procedure can be performed at an ASC under Medicare — CMS maintains a list of covered ASC procedures: The ASC covered procedures list: CMS publishes an annually updated list of CPT/HCPCS codes that are covered in the ASC setting; to be on the list, a procedure must be: safe to perform in a facility not providing emergency services; not requiring a stay exceeding 24 hours; of a type that would commonly be expected in an outpatient setting; Procedures that are NOT covered at ASC for Medicare: procedures that CMS has determined require hospital-level resources; implantable cardiac defibrillator (ICD) implantation; total joint replacement (hip, knee — though this is evolving); complex spinal procedures; cardiac cath (CABG); organ transplants; procedures requiring blood bank resources; procedures historically performed only in hospital inpatient settings; Inpatient-only procedures: the Medicare inpatient-only (IPO) list specifies procedures that may be covered only in an inpatient hospital setting under Medicare; performing an IPO procedure in an ASC results in no Medicare facility payment; Physician self-referral (Stark) and ASC ownership: many ASCs are partially owned by the operating surgeons; physician ownership of an ASC is generally permissible under a Stark Law exception if ownership is proportionate to the physician's ownership stake; the ASC must be properly structured to meet the applicable Stark exception; Covered procedure categories common in ASC: ophthalmology (cataract extraction — CPT 66982/66984 — is the single highest-volume ASC procedure in the Medicare program); gastroenterology (colonoscopy 45378-45392, upper endoscopy 43239); orthopedics (knee arthroscopy 29881, shoulder arthroscopy 29827, carpal tunnel release 64721); pain management (epidural steroid injections 62321-62325, facet joint injections 64490-64495); urology (cystoscopy 52000, TURP 52601); general surgery (laparoscopic cholecystectomy 47562, hernia repair 49505/49650).
UB-04 Facility Claim Billing
The ASC bills its facility fee on the UB-04 claim form (CMS-1450), which is distinct from the CMS-1500 used by the surgeon and anesthesiologist: Key UB-04 fields for ASC billing: Form Locator (FL) 4 — Type of Bill: 831X for ambulatory surgery center (8 = facility type, 3 = ASC, 1 = outpatient); FL 6 — Statement Period: from/through dates of service; FL 44 — Revenue Codes and FL 56 — NPI: the ASC's NPI (not the surgeon's NPI); FL 76 — Attending Provider: the operating surgeon's NPI is typically entered here; FL 82/83 — Other Provider IDs: anesthesiologist NPI if applicable; Revenue codes for ASC: 0360 — Operating room services (primary revenue code for ASC); 0490 — Ambulatory surgical center; 0370 — Anesthesia (if ASC provides CRNA anesthesia); 0250 — Pharmacy (for separately billable drugs); 0636 — Drugs requiring detailed coding (with NDC in the HIPAA transaction); HCPCS/CPT codes on the ASC claim: the surgical procedure CPT codes are listed in FL 44 alongside the revenue code; the same CPT codes the surgeon bills for the professional fee are listed on the ASC facility claim; Modifier coding on ASC claims: Modifier 50 — bilateral procedure (ASC reduces by 50% for the second procedure); Modifier 73 — discontinued outpatient procedure prior to anesthesia administration (ASC gets no payment); Modifier 74 — discontinued outpatient procedure after anesthesia administration (ASC receives 50% of payment); UB-04 condition codes and occurrence codes: condition code 04 — information request (used when records are attached); occurrence codes for relevant events; Pre-certification on the facility claim: payer-specific prior authorization numbers are entered in the appropriate fields; missing authorization on the facility claim is one of the most common commercial payer denial reasons for ASC claims.
Implant and Device Billing
Device-intensive procedures and implant billing represent the highest-dollar ASC billing considerations beyond the base procedure payment: Device-intensive procedures: CMS designates certain procedures as "device-intensive" where the implant cost exceeds a threshold percentage of the total ASC payment; for device-intensive procedures, the ASC receives an additional offset payment on top of the base ASC rate to account for the device cost; the device offset is calculated as a percentage of the OPPS payment for the procedure; Separately payable implants: implants that have received OPPS pass-through status may be separately billable (though pass-through status for new devices is typically limited to 2-3 years); after pass-through expiration, the implant is packaged into the OPPS and ASC rate; Implant HCPCS coding: implants are billed using HCPCS codes (C-codes for hospital OPPS, or specific L, V, or C codes for the ASC); common implant categories: orthopedic implants (screws, plates, anchors, prosthetic components); spinal implants (cages, rods, screws); ophthalmic implants (IOLs for cataract surgery — V2632 for multifocal IOL, V2630 for standard posterior chamber IOL); cardiac implants (stents — C1874, C1876, etc.); Charge capture for implants at ASC: ASC charge capture for implants requires integration between the surgery schedule (what implants were opened and used) and the billing system; implants that are opened but not used are typically not billable to the payer — waste documentation is needed for internal accounting; Commercial payer implant reimbursement: commercial payers often have separate implant carve-out provisions in ASC contracts — the implant is reimbursed at cost plus a markup percentage, separately from the procedure facility fee; ASC contracts should specify the implant reimbursement methodology to avoid disputes.
Commercial Payer ASC Contracting
Medicare's 65.6% OPPS-based ASC rates are generally lower than what commercial payers pay ASCs. Commercial contracting is critical to ASC financial performance: Commercial ASC reimbursement models: percentage of Medicare ASC rate: e.g., 180% of Medicare ASC fee schedule; percentage of billed charges: e.g., 45% of billed charges; procedure-specific fee schedule with flat rates per CPT code; case rate (all-inclusive rate per procedure regardless of implants and supplies — risky for device-intensive procedures); ASC vs. hospital outpatient rate: commercial payers pay hospital outpatient departments (HOPDs) substantially more than ASCs for the same procedures; the ASC's value proposition to commercial payers is lower cost for the same quality; a well-run ASC should be able to negotiate rates at 60–80% of HOPD rates while delivering equivalent or better outcomes; Implant carve-outs in commercial contracts: most commercial ASC contracts include an implant carve-out provision — implants above a dollar threshold are reimbursed separately (typically at invoice cost + markup); negotiate: the per-implant threshold (below which implants are included in the procedure rate); the markup percentage (typically 10–20% above invoice); documentation requirements for implant carve-out billing; Prior authorization requirements: commercial payers require prior authorization for most ASC procedures; the facility's prior auth workflow must mirror the surgeon's office PA workflow — both the facility and the professional component typically require the same authorization number; Quality metrics and value-based contracting: ASCs are increasingly well-positioned for value-based contracts due to their low infection rates, low complication rates, and high patient satisfaction scores; some commercial payers are piloting episode-based payments for high-volume ASC procedures (cataract, knee arthroscopy) that bundle the facility fee, professional fee, and anesthesia into a single payment.
FAQ
How should an ASC handle billing when a procedure is converted from outpatient ASC to inpatient during or after the procedure?
ASC-to-inpatient conversion — when a patient undergoing an ASC procedure must be admitted to the hospital — is one of the most billing-sensitive scenarios in ASC operations: Clinical scenarios requiring conversion: intraoperative or post-operative complication requiring hospital admission; patient's condition deteriorating beyond ASC management capabilities; procedure taking longer than expected with anesthesia complications; post-operative pain control failure requiring IV narcotic management beyond ASC capability; Billing when conversion occurs BEFORE the procedure begins: if the patient is converted before the procedure starts (the patient is prepped and in the ASC but the incision has not been made), the ASC cannot bill a facility fee; the surgeon may be able to bill an E&M for the pre-operative evaluation; Modifier 73: if the procedure is cancelled after the patient is brought to the procedure room but BEFORE anesthesia is administered or the procedure is initiated, Modifier 73 (discontinued procedure prior to anesthesia) is appended; Medicare does not pay for 73-modified claims — the modifier documents the encounter without generating payment; Modifier 74: if the procedure is cancelled AFTER anesthesia is administered or the procedure is initiated (incision made), Modifier 74 is appended; Medicare pays 50% of the ASC facility fee when Modifier 74 is used; When inpatient admission follows the ASC procedure: if the patient undergoes the procedure at the ASC and is then transferred to the hospital for inpatient admission: the ASC bills its facility fee normally (the procedure was completed at the ASC); the hospital bills the inpatient admission separately; the surgeon bills the professional fee; the ASC facility fee and the hospital inpatient admission are separate claims — they are not combined; Medicare 72-hour rule: for hospital outpatient services, the 72-hour rule requires that diagnostic services performed within 3 days of an inpatient admission are bundled into the inpatient DRG payment; this rule does NOT apply to ASC services — ASC services are not subject to the 72-hour bundling rule; Commercial payer conversion policies: commercial contracts may have specific provisions for ASC-to-inpatient conversion; review contract language for any provisions affecting facility fee payment when the patient is subsequently admitted to the hospital.
What are the Medicare conditions for coverage (CfC) that an ASC must meet to receive Medicare payment?
To receive Medicare payment, an ASC must meet the Medicare Conditions for Coverage (CfCs) established by CMS under 42 CFR Part 416. CfC compliance is verified through periodic Medicare certification surveys conducted by state survey agencies or accreditation organizations: Key ASC Medicare Conditions for Coverage: Governing body and management: the ASC must have a governing body with clearly defined responsibilities; quality assessment and performance improvement (QAPI) program; medical staff credentialing; Patient rights: patients must be informed of their rights before procedures; patients must be informed of facility charges before the procedure; disclosure of physician ownership is required under the Affordable Care Act; Surgical services: only Medicare-covered surgical procedures on the covered procedures list may be performed; policies must ensure patient selection criteria are met (procedures appropriate for ASC setting); Patient safety: adequate anesthesia policies and procedures; infection control program; emergency preparedness plan; transfer agreement with a local hospital (or hospital within a reasonable distance); Nursing and anesthesia services: licensed nurses and qualified anesthesia providers; the ASC must have documented policies for anesthesia monitoring, recovery, and discharge criteria; Pharmaceutical services: proper drug storage, labeling, and administration; medication reconciliation process; Physical environment: facility must meet applicable state and federal fire safety codes; adequate space for procedure rooms, recovery, sterilization, and clean/dirty utility areas; Quality Assessment and Performance Improvement (QAPI): the ASC must have an ongoing QAPI program that tracks quality indicators, analyzes outcomes, and implements improvement projects; common tracked measures: surgical site infections, adverse events, unplanned hospital transfers, patient satisfaction; Accreditation organizations: ASCs may seek accreditation through CMS-approved accreditation organizations (AAAHC, Joint Commission, AAASF, AOA, HFAP) as an alternative to state survey; accreditation is deemed equivalent to meeting the Medicare CfCs; Deemed status through accreditation is common for ASCs — the accreditation organization's survey replaces the state survey.
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