CMS Pub. 100-04, ch. 14, § 30

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

procedure:

• The cost of the physician’s professional services for the performing the

procedure; and

• The cost of services furnished by the facility where the procedure is performed

(for example, surgical supplies and equipment and nursing services).

For ASC covered surgical procedures, the professional fee is paid to the physician;

payments for facility costs are paid to the ASC.

Prior to the revised ASC payment system implemented January 1, 2008, the ASC

payment rate was a standard overhead amount based on CMS’s estimate of a fair fee and

the costs incurred by the ASCs providing the procedure. To estimate this cost, CMS

surveyed audit costs incurred by a sample of ASCs. There is an annual adjustment for

inflation based on the percentage increase in the consumer price index for urban

consumers in years when the ASC payment rates are not updated by a survey or

otherwise. Over a number of years, there have been statutory requirements reducing or

eliminating the inflation adjustment on a year by year basis. For example, the statute

requires that the CPI adjustment factor be zero percent in FY 2005, the last quarter of CY

2005, and each CY from 2006 through 2009.

Beginning January 1, 2008, the revised ASC payment system includes the following

features:

ASC payment rates for most services are based on a percentage of the hospital outpatient

prospective payment system (OPPS) rates. Unless statutorily prohibited, there is annual

adjustment of the payment rates for inflation based on the CPI-U. The update for

inflation begins with the CY 2010 ASC payment rates when the statutory requirement for

a zero update no longer applies. For CYs 2019 through 2023, the annual adjustment of

ASC payment rates for inflation is based on the hospital market basket update.

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. An exception to this is screening flexible

sigmoidoscopies and screening colonoscopies, regardless of the code that is billed for the

establishment of a diagnosis as a result of the test, or for the removal of tissue or other

matter or other procedure, that is furnished in connection with, as a result of, and in the

same clinical encounter as the colorectal cancer screening test. The coinsurance will be

gradually reduced until it is completely waived for dates of service on or after January 1,

2030.

Beginning with the implementation of the 2008 revised payment system, the labor related

adjustments to the ASC payment rates are based on the Core-Based Statistical Area

(CBSA) methodology. 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.

Detailed information on both the OPPS and ASC payment methodologies is available in

the hospital outpatient and ASC final rules.