Patient Safety and Policies that Decide Your Payments T

his June-July issue of ASC Focus brings you articles on two key operational areas in your ASC: patient safety and marketing. Read a column on patient safety on page 8; learn about the most challenging accreditation guidelines related to medication management on page 10; find out how best to work with compounding pharmacies on page 14; consider ways to win over patients through engagement on page 16; and read about a screening colonoscopy program in a Missouri ASC that is seeing early success. In the Regulatory Review column on page 26, ASCA Regulatory Counsel Kara

Newbury looks at some of the more intricate and lesser known policies of the Centers for Medicare & Medicaid Services (CMS) that determine your ASC payments. In brief, Medicare’s ASC payment system is “prospective,” meaning that CMS

staff decide in advance how much they will reimburse for each code. At a basic level, CMS places similar types of codes—by specialty and complexity—into Ambulatory Payment Classification (APC) groups and, for the most part, every code within an APC is assigned the same payment rate. CMS staff determine the payment rates for each APC by looking at several factors, starting with the hospital outpatient cost reports. The higher the volume for a particular code, the more that code’s costs factor into the overall APC payment rate. These APC payment rates are then multiplied by a conversion factor (for ASCs this is based off the Consumer Price Index for All Urban Consumers) to determine the national payment rates. Once these national payment rates are set, geographic adjustments based on local labor costs are made to determine local payment rates—meaning your reimbursement for a procedure might be slightly higher or lower than that of another ASC located in another area of the country. CMS has decided that 50 percent of costs in the ASC setting are labor related, so to come up with your local rate, 50 percent of the rate is multiplied by your local wage index, which is a figure determined by comparing your area’s average hourly wage to the national average hourly wage. In addition to being a prospective payment system, CMS considers the ASC

payment system “budget neutral.” This means that the total projected CMS expenditures for all services cannot be increased without decreasing costs somewhere else. If the ASC total payments are a pie, and certain APC groups get a larger slice of the pie than in previous years, this means that other APC groups’ slices must be smaller. It is important to note that if new codes are added, they aren’t cut out of an already existing slice, though; the pie becomes slightly larger. If you want to know more about the many other variables that come into play in

Seeking Authors

ASC Focus is seeking the contribution of articles by guest authors. If you have the expertise and time to write for us, we’d be interested in hearing from you.

Please see our editorial guidelines at and submit your story proposal to


setting your ASC’s payment rates using this sophisticated payment system, turn to the full Regulatory Review column for additional detail. As always, we hope this issue of ASC Focus helps you make informed decisions

at your ASC that lead to lasting benefits for your patients, physicians and staff. If you have other topics that you would like us to cover, or if you would like to contribute an article, please write Sahely Mukerji at

Bill Prentice Chief Executive Officer


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