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TRICARE Reimbursement Manual 6010.64-M, April 2021
Ambulatory Surgery Centers (ASCs)
Chapter 9
Section 1
Ambulatory Surgical Center (ASC) Reimbursement
Issue Date:  August 26, 1985
Authority:  32 CFR 199.14(d)
Copyright:  CPT only © 2006 American Medical Association (or such other date of publication of CPT). All Rights Reserved.
1.1  The contractor shall apply this policy to reimburse network or non-network provider services. However, the contractor shall allow alternative network reimbursement methodologies when approved by the Defense Health Agency (DHA) and specifically included in the network provider agreement.
1.2  The contractor shall use this policy to reimburse surgical procedures performed in an ASC prior to the implementation of the reasonable cost method for Critical Access Hospitals (CAHs) and implementation of TRICARE’s Outpatient Prospective Payment System (OPPS), and thereafter, freestanding ASCs (FASCs), and other providers who are exempt from the TRICARE OPPS and provide scheduled ambulatory surgery. For purposes of this section, these facilities are known as non-OPPS facilities. Non-OPPS facilities include any facility not subject to the OPPS as outlined in Chapter 13, Section 1.
2.0  Reimbursement Of Ambulatory Surgery
2.1  The contractor shall apply this reimbursement policy to surgical procedures performed in FASCs and other TRICARE providers who are exempt from the TRICARE OPPS which provide scheduled ambulatory surgery. The contractor shall reimburse ambulatory surgery services performed in CAHs under the reasonable cost method (reference Chapter 15, Section 1).
2.2  State Waiver
The contractor shall not exempt ambulatory surgery services provided by FASCs in Maryland from this system and the contractor shall reimburse them using the procedures set forth in this section. (See Chapter 1, Section 24 for payment of professional services related to ambulatory surgery.)
The contractor shall reimburse ambulatory surgery procedures performed by providers described in paragraph 2.0 using prospectively determined rates. The rates will be on a cost-basis, divided into eleven payment groups representing ranges of costs, and adjusted for area labor costs based on Metropolitan Statistical Areas (MSAs). The contractor shall not pay for additional benefits outside the ASC payment rate; e.g., Revenue Codes 260, 450, 510, 636.
3.1  The contractor shall use the ambulatory surgery payment system regardless of where the ambulatory surgery procedures are provided, that is, in a freestanding ASC, in a Hospital Outpatient Department (HOPD), or in a hospital Emergency Room (ER). The contractor shall not pay additional benefits outside the ASC payment rate; e.g., Revenue Codes 260, 450, 510, 636.
3.2  The contractor shall pay payment rates established under this system only to the facility charges for ambulatory surgery. The facility rate is a standard overhead amount that includes nursing and technician services; use of the facility; drugs including take-home drugs for less than $40; biologicals; surgical dressings, splints, casts and equipment directly related to provision of the surgical procedure; materials for anesthesia; Intraocular Lenses (IOLs); and administrative, recordkeeping and housekeeping items and services.
3.3  The DHA payment rate does not include items such as physicians’ fees (or fees of other professional providers authorized to render the services and to bill independently for them); laboratory, X-rays or diagnostic procedures (other than those directly related to the performance of the surgical procedure); orphan drugs; prosthetic devices (except IOLs); ambulance services; leg, arm, and back braces; artificial limbs; and Durable Medical Equipment (DME) for use in the patient’s home.
Note:  The contractor shall consider a radiology and diagnostic procedure directly related to the performance of the surgical procedure only if it is an inherent part of the surgical procedure, e.g., the Common Procedure Terminology (CPT) code for the surgical procedure includes the diagnostic or radiology procedure as part of the code description (i.e., CPT code 47560).
3.4  Ambulatory Surgery Payment Rates
3.4.1  DHA will calculate the payment rates and will provide them electronically to the contractors annually. The electronic media will include the locally-adjusted payment rate for each payment group for each MSA and will identify, by procedure code, the procedures in each group and the effective date for each procedure. The MSAs and corresponding wage indexes will be those used by Medicare.
3.4.2  In addition to the payment rates, DHA will provide the contractors with a ZIP code to MSA crosswalk, so that they can determine which payment rate to use for each ambulatory surgery provider. For this purpose, the contractor shall use the ZIP code of the facility’s physical address (as opposed to its billing address). DHA will update this crosswalk periodically throughout the year and send it to the contractor.
3.4.3  In order to calculate payment rates, DHA will only use those procedures with at least 25 claims nationwide during the database period.
3.4.4  DHA initially calculated rates using the following steps.  For each ambulatory surgery procedure, DHA calculated a median standardized cost on the basis of all ambulatory surgery charges nationally under TRICARE during the one-year database period. The steps in this calculation included:
•  Standardizing for local labor costs by reference to the same wage index and labor/non-labor-related cost ratio as applies to the facility under Medicare;
•  Applying the Cost-to-Charge Ratio (CCR) using the Medicare CCR for FASCs for TRICARE ASCs.
•  Calculating a median cost for each procedure; and
•  Updating to the year for which the payment rates were in effect by the Consumer Price Index-Urban (CPI-U).  Procedures were placed into one of 10 groups by their median per procedure cost, starting with $0 to $299 for Group 1 and ending with $1,000 to $1,299 for Group 9 and $1,300 and above for Group 10. Groups 2 through 8 were set on the basis of $100 fixed intervals.  The standard payment amount per group will be the volume weighted median per procedure cost for the procedures in that group.  DHA assigned procedures for which there was no or insufficient (less than 25 claims) data to groups by:
•  Calculating a volume-weighted ratio of TRICARE payment rates to Medicare payment rates for those procedures with sufficient data;
•  Applying the ratio to the Medicare payment rate for each procedure; and
•  Assigning the procedure to the appropriate payment group.
3.4.5  The contractor shall ensure the amount paid for any ambulatory surgery service under these procedures does not exceed the amount that would be allowed if the services were provided on an inpatient basis. The allowable inpatient amount equals the applicable Diagnosis Related Group (DRG) relative weight multiplied by the national large urban adjusted standardized amount. DHA will adjust this amount by the applicable hospital wage index.
3.4.6  Grouping and Additions to the ASC Procedure List for Dates of Service On or After March 1, 2017  Effective March 1, 2017, the contractor shall cost-share only those procedures listed on DHA’s ambulatory surgery website for FASCs. Upon evaluation, DHA may add additional procedures to the list. DHA will group procedures in accordance with the following procedures:  The contractor may bring additional procedures that are not on the ASC list to DHA’s attention, for evaluation for inclusion on the ASC list. The DHA will update the ASC list on an annual basis on January 1st. DHA will notate newly added procedures within the listing posted to the DHA website.  The contractor shall apply newly-added procedure rates developed through the procedures established in paragraph only to FASCs. The contractor shall not apply newly-added procedure rates to other non-OPPS providers (i.e., those listed in Chapter 13, Section 1 except FASCs), for surgical procedures and shall continue to pay in accordance with the Chapter 1, Section 24.  The list of newly-added procedures shall then be updated and revised on a quarterly basis (January 1, April 1, July 1, and October 1).
3.5  Payments
3.5.1  General
The contractor shall payment the standard payment amount for the group which covers that procedure, adjusted for local labor costs by reference to the same labor/non-labor-related cost ratio and hospital wage index as used for ASCs by Medicare. DHA will perform this calculation. For participating claims, the contractor shall reimburse using the ambulatory surgery payment rate regardless of the actual charges made by the facility--that is, regardless of whether the actual charges are greater or smaller than the payment rate. For nonparticipating claims, the contractor shall ensure reimbursement (TRICARE payment plus beneficiary cost-share plus any double coverage payments, if applicable) does not exceed the lower of the billed charge or the group payment rate.
3.5.2  Procedures Which Do Not Have An Ambulatory Surgery Rate and Are Provided by an FASC  The contractor shall reimburse only those surgical procedures that have an ambulatory surgery rate listed on DHA’s ambulatory surgery website ( under this reimbursement process. Effective March 1, 2017, claims it receives from an ASC for a surgical procedure which is not listed on DHA’s ambulatory website, for services provided on or after March 1, 2017.  The contractor shall reimburse non-surgical services, such as evaluation and management visits, laboratory, and radiology services in accordance with TRICARE’s allowable charge methodology (see Chapter 5).
3.5.3  Multiple and Terminated Procedures  Discounting for Multiple Surgical Procedures  The contractor shall reimburse professional services according to the multiple surgery guidelines in Chapter 1, Section 16.  The contractor shall discount multiple surgical procedures is subject to the provisions in Chapter 13, Section 3.  Effective March 1, 2017, the contractor shall reimburse FASCs for only those surgical services on TRICARE’s ASC list (see paragraph 3.5.2).  Discounting for Bilateral Procedures  The contractor shall discount bilateral procedures based on the application of discounting formulas appearing in Chapter 13, Section 3.  Modifiers for Discounting Terminated Surgical Procedures  The contractor shall understand that providers may bill industry standard modifiers on outpatient hospital or individual professional claims to further define the procedure code or indicate that certain reimbursement situations. The contractor shall recognize and use modifiers to ensuring accurate claims processing and payment.  The contractor shall understand that providers use industry standard modifiers to identify surgical procedures which have been terminated prior to and after the delivery of anesthesia.
•  Modifiers 52 and 73 are used to identify a surgical procedure that is terminated prior to the delivery of anesthesia and is reimbursed at 50% of the allowable; i.e., the ASC tier rate, the Ambulatory Payment Classification (APC) allowable amount for OPPS claims, or the CHAMPUS Maximum Allowable Charge (CMAC) for individual professional providers.
•  Modifiers 53 and 74 are used for terminated surgical procedures after delivery of anesthesia which are reimbursed at 100% of the appropriated allowable amounts referenced above.  Unbundling of Procedures
The contractor shall ensure claims reimbursement involving multiple procedures conforms to the unbundling guidelines as outlined in Chapter 1, Section 3.  Incidental Procedures
The contractor shall apply rules in Chapter 1, Section 3 for reimbursing incidental procedures to ambulatory surgery procedures reimbursed under the rules set forth in this section. That is, the contractor shall not reimburse for incidental procedures performed in conjunction with other procedures which are not classified as incidental. The contractor shall apply this limitation payments for facility claims as well as to professional services.
3.6  Updating Payment Rates
DHA will update the rates annually by the same update factor used in the Medicare annual updates for ASC payments.
•  The rates were increased by 2.1% effective January 1, 2019.
•  The rates were increased by 2.6% effective January 1, 2020.
•  The rates were increased by 2.4% effective January 1, 2021.
3.7  Claims for Ambulatory Surgery
3.7.1  Claim Forms
The contractor shall ensure claims for facility charges are submitted on a Centers for Medicare and Medicaid Services (CMS) 1450 UB-04. The contractor shall ensure claims for professional charges are submitted on either a CMS 1450 UB-04 or a CMS 1500 Claim Form. The preferred form is the CMS 1500 Claim Form. When professional services are billed on a CMS 1450 UB-04, the contractor shall ensure the information on the CMS 1450 UB-04 indicates that these services are professional in nature and are identified by the appropriate CPT-4 code and revenue code.
3.7.2  Billing Data
The contractor shall ensure the claim identifies all procedures performed (by CPT-4 or HCPCS code). The contractor shall ensure the facility claim is submitted on the CMS 1450 UB-04, the procedure code is shown in Form Locator (FL) 44.
Note:  The contractor shall ensure claims from ASCs are submitted on the CMS 1450 UB-04 claim form. The contractor shall deny claims not submitted on the appropriate claim form.
3.8  Wage Index Changes
If, during the year, Medicare revises any of the wage indexes used for ambulatory surgery reimbursement, DHA will not incorporate such changes into the TRICARE payment rates until the next routine update. DHA will not incorporate these changes regardless of the reason Medicare revised the wage index.
3.9  Subsequent Hospital Admissions
If a beneficiary is admitted to a hospital that is subject to the DRG-based payment system due to complications associated with ambulatory surgery, the contractor shall ensure the provider bills the ambulatory surgery procedures separately from the hospital inpatient services. The contractor shall reimburse them separately. The contractor shall ensure the provider follows the same rules applicable to ER services.
3.10  Cost-Shares For Ambulatory Surgery Procedures
The contractor shall cost-sharing all surgical procedures performed in an outpatient setting at the ASC cost-sharing levels. Refer to Chapter 2, Sections 1 and 2.
3.11  Exclusions
The contractor shall exclude surgical procedures in freestanding ASCs that do not have an ambulatory surgery rate listed on DHA’s ambulatory surgery website from cost-sharing.
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