Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Payment for Procedures in Outpatient 
Departments and Ambulatory Surgical 
Centers 
JANET REHNQUIST 
Inspector General 
JANUARY 2003 
OEI-05-00-00340  O I G
FFICE OF  NSPECTOR  ENERAL

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, 
is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as 
the health and welfare of beneficiaries served by those programs.  This statutory mission is carried out 
through a nationwide network of audits, investigations, and inspections conducted by the following 
operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits examine the 
performance of HHS programs and/or its grantees and contractors in carrying out their respective 
responsibilities and are intended to provide independent assessments of HHS programs and operations in 
order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 
Department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 
public.  The findings and recommendations contained in the inspections reports generate rapid, accurate, 
and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 
monetary penalties.  The OI also oversees State Medicaid fraud control units which investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support in OIGs internal 
operations.  The OCIG imposes program exclusions and civil monetary penalties on health care providers 
and litigates those actions within the Department.  The OCIG also represents OIG in the global settlement 
of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E  S U M M A R Y  
OBJECTIVE 
To determine to what extent Medicare payments for the same procedure codes continue to 
vary between hospital outpatient departments and ambulatory surgical centers and to assess the 
effect of this variance on the Medicare program. 
BACKGROUND 
The Medicare program most frequently pays for services provided to beneficiaries in the 
following ambulatory settings: hospital outpatient departments (OPDs), ambulatory surgical 
centers (ASCs) and physician offices.  Different regulations and statutes govern the methods for 
calculating reimbursement for each ambulatory setting. 
The Office of Inspector General (OIG) issued reports in 1991 documenting that Medicare paid 
more for services in OPDs than for the same procedure codes provided in ASCs.  In response 
to OIG recommendations, the Centers for Medicare & Medicaid Services (CMS) concluded 
that establishing uniform rates would guarantee that payment rates reflect only those costs 
necessary to deliver care regardless of the setting. 
We selected 453 procedure codes that CMS listed as ASC-approved procedures, which 
represent approximately 95 percent of all ASC-approved services in all settings in 1999. We 
compared the 2001 facility expense for 424 different procedure codes. 
FINDINGS 
Variation between ASC and OPD rates continues and results in an estimated $1.1 
billion in additional program payments 
Despite attempts to bring OPD and ASC payments more in line, variation between these rates 
continues. In 66 percent of the procedure codes examined, outpatient department rates are 
higher than ambulatory surgical center rates. The median difference was $282.33. For the 
remaining 145 procedure codes, Medicare reimbursed ASCs more. As a result of paying 
higher rates, Medicare paid an estimated $1.1 billion more for services provided in settings with 
higher reimbursement.  Not only do the rates vary, but there is 
i 
Payment Methodologies  OEI-05-00-00340  concern that the rates themselves do not reflect accurate costs for performing the procedures. 
Failure to remove certain procedure codes from the ASC list of covered 
procedures resulted in an estimated $8 to $14 million in additional program 
payments 
Currently, CMS regulations require that the ASC list of covered procedures not include 
procedures that are commonly performed or that may be safely performed in physicians 
offices.  Contrary to regulations, CMS has failed to remove certain procedure codes from the 
list of ASC-covered procedures. Using CMSs established criteria, 72 procedure codes 
should have been removed from the ASC-covered services list.  As a result of not removing 
these procedure codes, Medicare spent approximately $8 to $14 million more for services 
performed in ASCs as opposed to OPDs or physician offices, respectively. 
RECOMMENDATIONS 
We believe that Congress intended Medicare to be a prudent purchaser of services and only to 
pay for those costs that are necessary for the efficient delivery of needed health services.  Our 
analysis of payment systems shows that reimbursement disparities result in an estimated $1.1 
billion in additional Medicare program payments. Furthermore, failure to remove certain 
procedure codes from the list of ASC-approved procedures resulted in an estimated $8 to $14 
million in additional Medicare program payments. 
We reiterate previous OIG recommendations, with which CMS concurred, that there should be 
greater parity of payments for services performed in an outpatient setting and those performed 
in ASCs. These recommendations are consistent with the Medicare Payment Advisory 
Commissions position that all else being equal, Medicare payment should be based on the 
service, and not the setting. To safeguard the Medicare program from excessive payments, we 
recommend that CMS: 
	 seek authority to set rates that are consistent across sites and reflect only the costs 
necessary for the efficient delivery of health services, 
  conduct and use timely ASC-survey data to reevaluate ASC-payment rates, and 
	 remove the procedure codes that meet its criteria for removal from the ASC list of 
covered procedures. 
ii 
Payment Methodologies  OEI-05-00-00340  AGENCY COMMENTS 
We received comments from the Centers for Medicare & Medicaid Services.  The CMS 
neither concurred nor non-concurred with our recommendations. The complete text of CMSs 
comments can be found in Appendix E. 
The CMS commented that it would be valuable if we included an explicit acknowledgment that 
the three payment systems (outpatient prospective payment system, ASC fee schedule, and 
physician fee schedule) arise from different sections of the statute.  We recognize that different 
statutory authorities mandate how CMS reimburses OPDs, ASCs, and physicians. Our 
recommendation recognizes that CMS needs additional authority because the payment systems 
have evolved over time from different laws enacted by Congress.  We continue to urge CMS to 
seek the authority to set rates that are consistent across sites and reflect only the costs 
necessary for the efficient delivery of health services. 
The CMS stated that they have not conducted ASC surveys in some time due to competing 
priorities. They also note that the endeavor is quite difficult and poses a significant burden on 
ASCs. The CMS stated that it is now considering how best to proceed. We recognize the 
difficulty in developing and conducting a survey of costs in ASCs. However, we also recognize 
that operating a program where 2001 Medicare reimbursement was $1.6 billion, based on data 
that is more than 15 years old, does little to manage appropriately the ASC-payment system. 
We urge CMS to conduct and use timely ASC-survey data to reevaluate ASC-payment rates. 
In addition, CMS agrees that some procedures should be removed from the ASC-approved 
procedures list. The CMS states that they expect to complete the final rule regarding addition 
and deletions to the list of ASC-covered procedures. We understand that CMS is currently 
planning to issue parts of the June 1998 proposed regulations dealing with additions and 
deletions to the list of covered services.  Our review of the draft final regulation circulating 
within the Department reveals that only 6 of the 72 procedure codes that we recommended are 
scheduled for deletion. Consequently, procedure codes meeting CMSs criteria for removal 
from the ASC-covered procedure list will continue to be reimbursed as ASC-covered 
procedures resulting in higher program payments. 
iii 
Payment Methodologies  OEI-05-00-00340  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY ...................................................... i

INTRODUCTION .............................................................1

FINDINGS 
Variation between ASC and OPD rates continues................................. 6

Failure to remove ASC-approved procedures leads to additional costs ................. 9

CONCLUSION AND RECOMMENDATION  .................................... 10

AGENCY COMMENTS  ...................................................... 11

APPENDICES 
A:  Procedure code rates for OPDs and ASCs...............................12

B:  Number of codes by percent differences .................................18

C:  Analysis by BETOS classification ......................................19

D:  Procedure codes identified for removal from ASC list .......................21

E:  Agency Comments .................................................24

ACKNOWLEDGMENTS ..................................................... 27

iv 
Payment Methodologies  OEI-05-00-00340  I N T R O D U C T I O N  
OBJECTIVE 
To determine to what extent Medicare payments for the same procedure codes continue to 
vary between hospital outpatient departments and ambulatory surgical centers and to assess the 
effect of this variance on the Medicare program. 
BACKGROUND 
The Medicare program covers hospital outpatient department (OPD) services, ambulatory 
surgical center (ASC) services and physician office services under the Medicare Supplementary 
Medical Insurance Program. How Medicare reimburses for services in these settings varies 
and has evolved over time. 
Office of Inspector General Work 
In the early 1990s, the Office of Inspector General (OIG) began examining how Medicare 
payments for services in ASCs and OPDs compared. In February and June 1991, OIG 
released two reports, which documented that Medicare paid more for services in OPDs than 
for the same services provided in ASCs. 
In the February 1991 report, OIG examined payment for surgical services performed in OPDs 
as compared with payment for similar services paid in ASCs. The services examined were 
furnished in calendar year (CY) 1988.  The study found that if Medicare had limited its 
reimbursement for these services to the ASC rates, OPD payments could have been reduced 
by $89 million.1 
In the June 1991 report, OIG examined three high-volume procedures. They examined 
services provided in the first quarter of CY 1988 from the 10 states with the highest number of 
ASCs. The analysis included surgeons fees, facility fees, preoperative and postoperative office 
visits and intraocular lens fees, when appropriate. The study found that Medicare payments to 
OPDs exceeded payments to ASCs by 26 to 74 percent, depending on the procedure.2 
1
A-14-89-00221, Medicare Reimbursement for Hospital Outpatient Department Services, February 1991 
2
OEI-09-88-01003, Reimbursement for Outpatient Facility Services, June 1991 
1 
Payment Methodologies  OEI-05-00-00340  Both reports made similar recommendations that directed the Centers for Medicare & 
Medicaid Services (CMS) to seek parity in the rates paid to OPDs and ASCs.  For the fiscal 
year 1992 budget, the Presidents budget request proposed that prospective rates for OPDs 
and ASCs be set at the lower of the OPD rate or the ASC rate. More recently, CMS stated 
that establishing uniform rates will guarantee that payment rates reflect only the costs necessary 
to efficiently deliver a Medicare service regardless of service setting.3 To achieve this result, 
CMS planned to examine the differences across sites to develop recommendations for 
legislative change.  The CMS has contracted with an outside organization to perform this 
analysis. 
Medicare Reimbursement Policy 
The Medicare program most frequently pays for services provided to beneficiaries in the 
following ambulatory settings: hospital OPDs, ASCs and physician offices. In 2001, Medicare 
reimbursement for outpatient services and ASC services was $17.7 billion and $1.6 billion, 
respectively.  A number of factors have the potential to influence where a patient receives their 
care, including the patients medical diagnosis, the availability of different settings, ownership 
interests, a physicians admitting privileges, and payment. 
Except the physicians office, two claims are submitted when a service is provided in an 
ambulatory setting. One claim represents the physicians service in providing the procedure, 
and the other claim represents the services provided by the facility for the provision of the 
procedure. When a procedure is provided in a physicians office, the physician submits a single 
claim that includes both professional and facility services. 
Hospital Outpatient Departments. Medicare historically reimbursed hospital OPDs for 
services using a facility fee, based on the lesser of costs or charges.  For ASC-covered 
procedures, Medicare reimbursed hospitals using either the lesser of costs or charges, or a 
blend of the hospitals costs or charges and the ASC payment rate. The intent of the blended 
rate was to bring OPD rates more in line with ASC rates.  In 1991, Congress set  the blended 
rate to 58 percent of the lower of the hospitals costs or charges and 42 percent of the ASC 
rate. 
Hospitals were required to file annual cost reports, which included all overhead and operating 
costs associated with operating the hospital.  The CMS used these reports to reconcile the 
hospitals actual service costs with the interim payments CMS made to hospitals throughout the 
year. 
In the Balanced Budget Act of 1997, Congress required that CMS implement an outpatient 
prospective payment system (PPS). Congress required that CMS use 1996 
3Review of the Health Care Financing Administrations Development of Medicares 
Prospective Payment System for Hospital Outpatient Department Services (A-14-98-00400) 
2 
Payment Methodologies  OEI-05-00-00340  claims data along with the most recent available cost report to determine the outpatient PPS. 
In August 2000, CMS implemented a PPS for hospital outpatient services.  The new PPS for 
outpatient procedures classifies services into a number of payment groups based on time, type 
of service, organ system involved, and the cost of performing the service. For each group, 
CMS assigned a payment weight based on the median cost (operating and capital) of the 
services included in that group. To determine the median cost, CMS used settled but not 
audited cost reports. 
The payment that a hospital receives for a service is the product of this payment weight, a 
dollar-based conversion factor, and a geographic adjustment factor to account for area labor 
cost differences. Currently, CMS bases the payment weight on outpatient claims that hospitals 
filed under the previous cost-based system.  In 2003, the payment weight will be based on the 
first year of outpatient PPS claims history. 
Ambulatory Surgical Centers.  In 1980, recognizing that some surgical procedures provided 
on an inpatient basis could be safely performed in less intensive and less costly settings, the 
Medicare program began covering services provided in ASCs. The ASCs operate exclusively 
for the purpose of providing surgical services to patients not requiring hospitalization.  A facility 
must have an agreement with CMS to participate as an ASC in Medicare. 
There are approximately 2,500 Medicare-approved procedures that Medicare can reimburse 
when performed in an ASC.  This list includes those procedures that can be performed safely 
and less costly in an ASC than in an inpatient setting. In addition, CMS regulations require that 
the ASC list of covered procedures not include procedures that are commonly performed or 
that may be safely performed in physicians offices.  This  prohibition was intended to 
discourage the shift of services from physician offices to ASCs. 
Congress required that the fee paid to ASCs equal 80 percent of the standard overhead 
amount established by the Secretary based on an estimate of a fair fee. The fair fee takes into 
account costs incurred by ASCs in providing services as determined by a survey of the actual 
audited costs. Congress required that CMS conduct these surveys every five years. 
The CMS assigns each procedure to one of eight payment groups. Currently, reimbursement 
for each group is calculated from cost and charge data obtained from 295 ASCs in 1986. The 
same adjusted amount applies to all procedures designated within a single payment group. 
In June 1998, CMS issued a proposed notice in the Federal Register, which would have 
implemented a PPS for ASCs.  To date, CMS has not issued the proposed notice in final. 
3 
Payment Methodologies  OEI-05-00-00340  The Benefits Improvement and Protection Act (BIPA) of 2000 delayed implementation of an 
ASC prospective payment system before January 1, 2002. The BIPA also required that CMS 
use 1999 or later cost survey data in the ASC prospective payment system. The CMS is 
continuing to work with the ASC industry to develop payment groupings that address the needs 
of both industry and the Medicare program. 
Physician Office. Beginning in 1992, reimbursement for physician office procedures uses a 
fee schedule based on three factors: the physicians work in providing services, their 
malpractice expense, and a practice expense.  A relative value unit (RVU) was assigned to 
each factor depending upon the service being provided.  The sum of these RVUs is then 
multiplied by a geographic factor and a conversion factor to maintain budget neutrality (changes 
resulting in increases in one RVU were balanced by decreases in another RVU). 
METHODOLOGY 
Identification of Procedure Codes for Analysis 
For our analysis, we selected 453 procedure codes that CMS listed as ASC-approved 
procedures in 1999.  These procedure codes were used a minimum of 1,000 times in any one 
of the following three settings: physician office, hospital OPDs, and ASCs.  These procedure 
codes represent 95 percent of the volume of all ASC-approved services in all settings in 1999. 
Because of the deletion of procedure codes, the number of procedure codes examined in 2001 
was 424.  (See Appendix A for the list of procedure codes along with OPD and ASC rates.) 
Practice or Facility Expense Comparison 
Medicare payments for ambulatory care generally consist of two separate parts: a payment to 
the facility for furnished services and supplies, and a payment to the practitioner for related 
professional services.  Payments to hospital OPDs and ASCs cover only facility costs. 
Physician and other professional costs are paid separately. Meanwhile, the facility payment 
under the physician fee schedule is considered to be the practice expense component of the fee 
schedule, which represents the costs of operating an office-based practice. 
To determine whether variation exists between ASCs and OPDs, we compared the 
reimbursement for the facility expense for these settings for 2001. For OPDs, we used the 
Hospital Outpatient Prospective Payment rates for 2001. For ASCs, we used the facility 
payment published in the Federal Register for the ASC group in which the procedure code fell 
for 2001. We used only the base amounts without geographic adjustments for all comparisons. 
4 
Payment Methodologies  OEI-05-00-00340  To determine whether certain procedure codes should have been removed from the ASC list of 
covered services, we used CMSs criteria for removing procedure codes from the ASC-
covered list. The CMSs criteria for removing ASC-approved procedures uses site-of-service 
volume. For a procedure code to be deleted, the inpatient, outpatient, and ASC site of service 
volumes need to be less than 46 percent of the procedures total volume, and the procedure 
needs to be performed more than 50 percent of the time in a physicians office. We used site-
of-service volume data from CY 1999. 
After determining which procedure codes met CMSs criteria, we determined what the 
potential effect would be on Medicare reimbursement for 2001.  To accomplish this, we 
developed two scenarios. The first scenario assumed that all the services related to the 
procedure codes identified for removal from the ASC list were performed in an OPD instead of 
an ASC.  In this case, we compared the Hospital Outpatient Prospective Payment rates for 
2001 to the ASC rates for 2001 to determine the effect. 
In the second scenario, we assumed that all the services related to the procedure codes 
identified for removal from the ASC list were performed in a physicians office instead of an 
ASC.  In this case, we compared the full 2001 physicians fee schedule amount to the 2001 
ASC rates. 
We did not evaluate the quality of care provided in these settings nor any concerns about 
access to care. Because of previous OIG work examining difference in rates between ASCs 
and OPDs, we limited our comparison to these two settings and did not compare these rates to 
the physician office fee schedule. 
We reviewed previous OIG reports as well as reports issued by the Medicare Payment 
Advisory Commission.  In addition, we reviewed all applicable statutes, regulations, and 
Federal Register notices. 
We conducted this inspection in accordance with the Quality Standards for Inspections, 
issued by the Presidents Council on Integrity and Efficiency. 
5 
Payment Methodologies  OEI-05-00-00340  F I N D I N G S  
We compared the payment rates between ASCs and OPDs for 424 different procedure codes 
for 2001.  Volume for these procedure codes represented approximately 95 percent of all 
ASC-approved services.  We found that variation between ASC and OPD rates continues, 
resulting in an estimated  $1.1 billion in additional Medicare program payments.  Furthermore, 
failure to remove certain procedure codes from the list of ASC-approved procedures resulted 
in an estimated $8 to $14 million in additional payments. 
Variation between ASC and OPD rates continues and results 
in higher program payments 
Despite attempts by the Congress and CMS to bring OPD and ASC payments more in line, 
variation between these rates continues.  Congress attempted to bring payments to hospitals 
more in line by changing how Medicare reimbursed hospitals for outpatient services.  In 
addition to congressional action, CMS concurred with a number of OIG recommendations to 
achieve parity between ASC and OPD rates. 
OPD rates exceed ASC rates two-thirds of the time 
For 66 percent (279) of the procedure codes that we examined, CMS reimbursed an OPD 
more than if the same service is provided in an ASC.  For these procedure codes, the median 
difference was $282.33.  The range of difference was $4.07 to $1,383.18.  Four procedure 
codes differed by more than 200 percent. 
For the remaining 34 percent (145) of the procedure codes, CMS reimbursed an ASC more 
than an OPD.  The median difference between ASC and OPD rates was $135.78 with a range 
of $3.18 to $410.39.  For 12 procedure codes, the difference between ASC and OPD rates 
was 200 percent or more. (See Appendix B for more information on the percent differences 
between OPD and ASC rates.) 
Medicare paid an estimated $1.1 billion more for services provided in settings with 
the higher reimbursement 
For those procedure codes where CMS reimbursed OPDs at a higher rate than ASCs, the 
Medicare program could have saved an estimated $1 billion if the lower ASC rate had been 
used. Almost 32 percent of the estimated savings comes from just one procedure code (66984 
- cataract surgery with intraocular lens insertion). Under the hospital outpatient prospective 
payment system, CMS reimbursed hospitals $1,333.89 for procedure code 66984, while 
CMS reimbursement for the same procedure code is $949 in ASCs. The volume of services is 
almost evenly split, with hospital outpatient 
6 
Payment Methodologies  OEI-05-00-00340  departments providing approximately 844,000 services and ASCs providing 802,000 services. 
For the 34 percent of procedure codes where Medicare paid ASCs more, an additional $100 
million in estimated savings could have been realized, if CMS had used the lower outpatient 
prospective rates instead of the higher ASC rates. Forty-five percent of this estimated savings 
comes from one procedure code (66821 - after cataract laser surgery).  An ASC received 
$433 for this service, while a hospital outpatient department received $245.67. For this 
procedure code, nearly twice as many services (235,085) occurred in ASCs than in hospital 
outpatient departments (122,072). 
To facilitate analysis of the data, we classified the 424 procedure codes using the Berenson-
Eggers Type of Service (BETOS) classification.  The CMS developed the BETOS system to 
analyze the growth in Medicare expenditures. An examination of the potential savings by 
BETOS groupings revealed that nearly half the savings was in the eye procedure group. This 
grouping of procedure codes contained approximately  $466 million in additional payments, of 
which cataract procedures represent  $330 million.  Another $233 million can be found in the 
BETOS group for endoscopies. (See Table 1 and Appendix C for additional information on 
savings by BETOS groupings.) 
7 
Payment Methodologies  OEI-05-00-00340  Table 1  Savings by BETOS Categories 
# of Procedure  BETOS  BETOS  OPD > ASC  ASC > OPD  Potential Savings 
Codes  Category  Description 
1  M5  Specialist  1  0  $1,101,131 
32  P1  Major Procedure- 20  12  $77,317,382 
Other 
12  P2  Major Procedure - 10  2  $81,124,618 
Cardiovascular 
18  P3  Major Procedure - 15  3  $48,464,759 
Orthopedic 
49  P4  Eye Procedures  41  8  $465,907,275 
165  P5  Ambulatory  120  45  $205,138,190 
Procedures 
54  P6  Minor Procedures  11  43  $14,897,995 
93  P8  Endoscopy  59  34  $232,511,646 
Total  279  145  $1,126,462,996 
Source: OIG analysis 
In addition, CMS could have reduced payments without necessarily creating equal rates.  For 
example, 144 procedure codes varied by more than $300.  If CMS limited the amount of 
difference to $300, they could have reduced payments by $352 million.  If CMS chose $400, 
they could have realized approximately $188 million in savings. 
Accuracy of OPD and ASC rates are questionable 
Not only do payment rates between OPDs and ASCs vary, but there is concern that the rates 
themselves do not reflect accurate costs for performing the procedure.  A series of OIG audits 
of hospital cost reports found significant unallowable and questionable costs.  Based on these 
audits, OIG raised concerns about the methodology used to determine hospital outpatient PPS 
rates, which used settled, but not audited, cost reports. The OIG believed that the original rate 
setting methodology included unallowable costs and improper payments, thereby inflating the 
rates.4 
4Review of the Health Care Financing Administrations Development of Medicares 
Prospective Payment System for Hospital Outpatient Department Services (A-14-98-00400) 
8 
Payment Methodologies  OEI-05-00-00340  In addition, CMS has not rebased the ASC payment amounts using recent survey data, which 
raises questions about the accuracy of the payment rates.  The law requires CMS to survey 
ASCs to determine the actual audited costs they incur. Currently, ASC payment rates are 
based on 1986 ASC survey data, which may not represent their operating costs today. 
Since 1992, the type of procedures that ASCs provide has changed.  In 1992, two eye 
procedure codes represented 57 percent of the ASC services. By 1999, this dropped to 42 
percent.  Over the same time period, the number of procedure codes with 1,000 or more 
services in an ASC increased from 72 procedure codes to 125 procedure codes.  Resource 
intense procedures performed in ASCs in 1986 may be less resource intensive now, due to 
changes in technology, and therefore, may be less expensive to perform. A more recent ASC 
survey may provide more accurate information for procedures that are now commonly 
performed in ASCs. 
Failure to remove certain procedure codes from the ASC list 
of covered procedures resulted in higher program payments 
Contrary to regulations, CMS has failed to remove procedure codes from the list of  ASC-
covered procedures.  Currently, CMS regulations require that the ASC list of covered 
procedures not include procedures that are commonly performed or that may be safely 
performed in physicians offices. To determine which procedure codes should be removed, 
CMS established a standard using utilization data.  Based on our analysis of calender year 1999 
data, 72 procedure codes met CMSs criteria for removal. 
As a result, Medicare potentially paid an additional $8 to $14 million for services 
If CMS removed the 72 procedure codes that met its criteria for removal from the  ASC-
covered list, CMS could have spent approximately $8 to $14 million less for services in 2001. 
If all the services related to these 72 procedure codes provided in ASCs were instead provided 
in hospital OPDs, CMS could have saved nearly $8 million. If these same services were 
provided in physician offices, CMS could have saved almost $14 million. (See Appendix D for 
more information on procedure codes and savings.) 
9 
Payment Methodologies  OEI-05-00-00340  C O N C L U S I O N  A N D  
R E C O M M E N D A T I O N  
We believe that Congress intended Medicare to be a prudent purchaser of services and only to 
pay for those costs that are necessary for the efficient delivery of needed health services.  Our 
analysis of payment systems shows that reimbursement disparities result in an estimated $1.1 
billion in additional Medicare program payments. Furthermore, failure to remove certain 
procedure codes from the list of ASC-approved procedures resulted in an estimated $8 to 14 
million in additional Medicare program payments. 
We reiterate previous OIG recommendations, with which CMS concurred, that there should be 
greater parity of payments for services performed in an outpatient setting and those performed 
in ASCs. These recommendations are consistent with the Medicare Payment Advisory 
Commissions position that, all else being equal, Medicare should pay for ambulatory care 
based on the service, not the setting.5 To safeguard the Medicare program from excessive 
payments, we recommend that CMS: 
	 seek authority to set rates that are consistent across sites and reflect only the costs 
necessary for the efficient delivery of health services, 
  conduct and use timely ASC-survey data to reevaluate ASC-payment rates, and 
	 remove the procedure codes that meet its criteria for removal from the ASC list of 
covered procedures. 
5
Report to the Congress, Context for a Changing Medicare Program, Medicare Payment Advisory 
Commission, June 1998, pg. 72 
10 
Payment Methodologies  OEI-05-00-00340  A G E N C Y  C O M M E N T S  
We received comments from the Centers for Medicare & Medicaid Services.  The CMS 
neither concurred nor non-concurred with our recommendations. The complete text of CMSs 
comments can be found in Appendix E. 
The CMS commented that it would be valuable if we included an explicit acknowledgment that 
the three payment systems (outpatient prospective payment system, ASC fee schedule, and 
physician fee schedule) arise from different sections of the statute.  We recognize that different 
statutory authorities mandate how CMS reimburses OPDs, ASCs, and physicians. Our 
recommendation recognizes that CMS needs additional authority because the payment systems 
have evolved over time from different laws enacted by Congress.  We continue to urge CMS to 
seek the authority to set rates that are consistent across sites and reflect only the costs 
necessary for the efficient delivery of health services. 
The CMS stated that they have not conducted ASC surveys in some time due to competing 
priorities. They also note that the endeavor is quite difficult and poses a significant burden on 
ASCs. The CMS stated that it is now considering how best to proceed. We recognize the 
difficulty in developing and conducting a survey of costs in ASCs. However, we also recognize 
that operating a program where 2001 Medicare reimbursement was $1.6 billion, based on data 
that is more than 15 years old, does little to manage appropriately the ASC-payment system. 
We urge CMS to conduct and use timely ASC-survey data to reevaluate ASC-payment rates. 
In addition, CMS agrees that some procedures should be removed from the 
ASC-approved procedures list. The CMS states that they expect to complete the final rule 
regarding addition and deletions to the list of ASC-covered procedures. We understand that 
CMS is currently planning to issue parts of the June 1998 proposed regulations dealing with 
additions and deletions to the list of covered services. Our review of the draft final regulation 
circulating within the Department reveals that only 6 of the 72 procedure codes that we 
recommended are scheduled for deletion. Consequently, procedure codes meeting CMSs 
criteria for removal from the ASC-covered procedure list will continue to be reimbursed as 
ASC-covered procedures resulting in higher program payments. 
11 
Payment Methodologies  OEI-05-00-00340  APPENDIX A 
Procedure Codes Examined with ASC and OPD Rates

12 
Payment Methodologies  OEI-05-00-00340  APPENDIX A 
HCPCS  OPD Rate  ASC Rate  Differences  HCPCS  OPD Rate  ASC Rate  Differences 
10180  $184.88  $433.00  ($248.12)  19101  $621.50  $433.00  $188.50 
11042  $177.35  $433.00  ($255.65)  19120  $621.50  $495.00  $126.50 
11043  $177.35  $433.00  ($255.65)  19125  $621.50  $495.00  $126.50 
11044  $625.50  $433.00  $192.50  19126  $621.50  $495.00  $126.50 
11404  $327.07  $323.00  $4.07  19140  $621.50  $612.00  $9.50 
11406  $327.07  $433.00  ($105.93)  19160  $621.50  $495.00  $126.50 
11424  $327.07  $433.00  ($105.93)  19162  $1,577.29  $966.00  $611.29 
11426  $627.50  $433.00  $194.50  19180  $1,577.29  $612.00  $965.29 
11444  $327.07  $323.00  $4.07  19290  $921.50  $323.00  $598.50 
11446  $627.50  $433.00  $194.50  19291  $921.50  $323.00  $598.50 
11604  $327.07  $433.00  ($105.93)  19318  $1,577.29  $612.00  $965.29 
11606  $527.02  $433.00  $94.02  20205  $527.02  $495.00  $32.02 
11624  $327.07  $433.00  ($105.93)  20206  $271.81  $323.00  ($51.19) 
11626  $627.50  $433.00  $194.50  20220  $200.97  $323.00  ($122.03) 
11644  $327.07  $433.00  ($105.93)  20225  $327.07  $433.00  ($105.93) 
11646  $627.50  $433.00  $194.50  20650  $755.63  $495.00  $260.63 
12020  $122.08  $323.00  ($200.92)  20670  $527.02  $323.00  $204.02 
12021  $122.08  $323.00  ($200.92)  20680  $627.50  $495.00  $132.50 
12034  $122.08  $433.00  ($310.92)  20690  $1,061.58  $433.00  $628.58 
13100  $187.90  $433.00  ($245.10)  20694  $755.63  $323.00  $432.63 
13101  $187.90  $495.00  ($307.10)  21550  $200.97  $323.00  ($122.03) 
13120  $187.90  $433.00  ($245.10)  21555  $627.50  $433.00  $194.50 
13121  $187.90  $495.00  ($307.10)  21556  $627.50  $433.00  $194.50 
13131  $187.90  $433.00  ($245.10)  21800  $82.40  $323.00  ($240.60) 
13132  $187.90  $495.00  ($307.10)  21920  $327.07  $323.00  $4.07 
13150  $608.42  $495.00  $113.42  21930  $627.50  $433.00  $194.50 
13151  $187.90  $495.00  ($307.10)  22305  $82.40  $323.00  ($240.60) 
13152  $187.90  $495.00  ($307.10)  22310  $82.40  $323.00  ($240.60) 
13160  $608.42  $433.00  $175.42  23120  $1,394.69  $696.00  $698.69 
14000  $608.42  $433.00  $175.42  23130  $1,394.69  $696.00  $698.69 
14001  $608.42  $495.00  $113.42  23410  $1,816.70  $696.00  $1,120.70 
14020  $608.42  $495.00  $113.42  23412  $1,816.70  $966.00  $850.70 
14021  $608.42  $495.00  $113.42  23420  $1,816.70  $966.00  $850.70 
14040  $608.42  $433.00  $175.42  23500  $82.40  $323.00  ($240.60) 
14041  $608.42  $495.00  $113.42  23600  $109.03  $323.00  ($213.97) 
14060  $608.42  $495.00  $113.42  23620  $109.03  $323.00  ($213.97) 
14061  $608.42  $495.00  $113.42  23700  $553.66  $323.00  $230.66 
14300  $608.42  $612.00  ($3.58)  24075  $527.02  $433.00  $94.02 
15000  $608.42  $433.00  $175.42  24076  $627.50  $433.00  $194.50 
15100  $608.42  $433.00  $175.42  24105  $755.63  $495.00  $260.63 
15101  $608.42  $495.00  $113.42  24500  $109.03  $323.00  ($213.97) 
15120  $608.42  $433.00  $175.42  24670  $109.03  $323.00  ($213.97) 
15220  $608.42  $433.00  $175.42  24685  $1,119.87  $495.00  $624.87 
15240  $608.42  $495.00  $113.42  25000  $755.63  $495.00  $260.63 
15260  $608.42  $433.00  $175.42  25075  $327.07  $433.00  ($105.93) 
15350  $608.42  $433.00  $175.42  25111  $568.72  $495.00  $73.72 
15576  $608.42  $495.00  $113.42  25115  $755.63  $612.00  $143.63 
13 
Payment Methodologies  OEI-05-00-00340  APPENDIX A 
HCPCS  OPD Rate  ASC Rate  Differences  HCPCS  OPD Rate  ASC Rate  Differences 
15732  $793.81  $495.00  $298.81  25310  $1,394.69  $495.00  $899.69 
15734  $793.81  $495.00  $298.81  25447  $1,109.82  $696.00  $413.82 
15740  $793.81  $433.00  $360.81  25605  $109.03  $495.00  ($385.97) 
19100  $271.81  $323.00  ($51.19)  25611  $1,119.87  $495.00  $624.87 
25620  $1,119.87  $696.00  $423.87  29822  $1,234.42  $495.00  $739.42 
26055  $568.72  $433.00  $135.72  29823  $1,234.42  $495.00  $739.42 
26115  $627.50  $433.00  $194.50  29826  $1,234.42  $495.00  $739.42 
26116  $627.50  $433.00  $194.50  29874  $1,234.42  $495.00  $739.42 
26121  $987.74  $612.00  $375.74  29875  $1,234.42  $612.00  $622.42 
26123  $987.74  $612.00  $375.74  29876  $1,234.42  $612.00  $622.42 
26125  $987.74  $612.00  $375.74  29877  $1,234.42  $612.00  $622.42 
26145  $568.72  $495.00  $73.72  29879  $1,234.42  $495.00  $739.42 
26160  $568.72  $495.00  $73.72  29880  $1,234.42  $612.00  $622.42 
26418  $568.72  $612.00  ($43.28)  29881  $1,234.42  $612.00  $622.42 
26531  $1,460.00  $966.00  $494.00  30115  $603.89  $433.00  $170.89 
26605  $109.03  $433.00  ($323.97)  30130  $603.89  $495.00  $108.89 
26860  $987.74  $495.00  $492.74  30140  $603.89  $433.00  $170.89 
26951  $568.72  $433.00  $135.72  30520  $1,276.12  $612.00  $664.12 
27193  $109.03  $323.00  ($213.97)  30801  $260.24  $323.00  ($62.76) 
27266  $1,109.82  $433.00  $676.82  30802  $603.89  $323.00  $280.89 
27425  $1,061.58  $966.00  $95.58  30903  $111.03  $323.00  ($211.97) 
27520  $109.03  $323.00  ($213.97)  30905  $111.03  $323.00  ($211.97) 
27530  $109.03  $323.00  ($213.97)  31233  $63.30  $433.00  ($369.70) 
27570  $553.66  $323.00  $230.66  31235  $683.78  $323.00  $360.78 
27750  $109.03  $323.00  ($213.97)  31237  $683.78  $433.00  $250.78 
27760  $109.03  $323.00  ($213.97)  31238  $683.78  $323.00  $360.78 
27780  $109.03  $323.00  ($213.97)  31240  $683.78  $433.00  $250.78 
27786  $109.03  $323.00  ($213.97)  31254  $920.01  $495.00  $425.01 
27792  $1,119.87  $495.00  $624.87  31255  $920.01  $696.00  $224.01 
27808  $109.03  $323.00  ($213.97)  31256  $920.01  $495.00  $425.01 
27814  $1,119.87  $495.00  $624.87  31267  $920.01  $495.00  $425.01 
28002  $755.63  $495.00  $260.63  31276  $920.01  $495.00  $425.01 
28043  $527.02  $433.00  $94.02  31287  $920.01  $495.00  $425.01 
28045  $777.23  $495.00  $282.23  31288  $920.01  $495.00  $425.01 
28080  $777.23  $495.00  $282.23  31525  $683.78  $323.00  $360.78 
28090  $777.23  $495.00  $282.23  31535  $920.01  $433.00  $487.01 
28110  $1,055.06  $495.00  $560.06  31536  $920.01  $495.00  $425.01 
28112  $777.23  $495.00  $282.23  31541  $920.01  $612.00  $308.01 
28113  $777.23  $495.00  $282.23  31570  $920.01  $433.00  $487.01 
28119  $777.23  $612.00  $165.23  31600  $625.50  $433.00  $192.50 
28122  $777.23  $495.00  $282.23  31615  $404.95  $323.00  $81.95 
28285  $777.23  $495.00  $282.23  31622  $404.95  $323.00  $81.95 
28288  $869.17  $495.00  $374.17  31625  $404.95  $433.00  ($28.05) 
28290  $1,055.06  $433.00  $622.06  31628  $404.95  $433.00  ($28.05) 
28292  $1,055.06  $433.00  $622.06  31629  $404.95  $433.00  ($28.05) 
28293  $1,055.06  $495.00  $560.06  31641  $404.95  $433.00  ($28.05) 
14 
Payment Methodologies  OEI-05-00-00340  APPENDIX A 
HCPCS  OPD Rate  ASC Rate  Differences  HCPCS  OPD Rate  ASC Rate  Differences 
28296  $1,055.06  $495.00  $560.06  31645  $404.95  $323.00  $81.95 
28308  $869.17  $433.00  $436.17  32000  $182.88  $323.00  ($140.12) 
28310  $777.23  $495.00  $282.23  32002  $182.88  $433.00  ($250.12) 
28315  $777.23  $612.00  $165.23  32020  $182.88  $433.00  ($250.12) 
28400  $109.03  $323.00  ($213.97)  32400  $271.81  $323.00  ($51.19) 
28750  $777.23  $612.00  $165.23  32405  $271.81  $323.00  ($51.19) 
28810  $777.23  $433.00  $344.23  36489  $271.30  $323.00  ($51.70) 
28820  $777.23  $433.00  $344.23  36491  $271.30  $323.00  ($51.70) 
28825  $777.23  $433.00  $344.23  36533  $971.66  $495.00  $476.66 
36534  $657.65  $433.00  $224.65  43450  $238.15  $323.00  ($84.85) 
36535  $328.07  $323.00  $5.07  43453  $238.15  $323.00  ($84.85) 
36800  $971.66  $495.00  $476.66  43456  $238.15  $433.00  ($194.85) 
36821  $1,330.88  $495.00  $835.88  43458  $238.15  $433.00  ($194.85) 
36825  $1,330.88  $612.00  $718.88  43750  $359.22  $433.00  ($73.78) 
36830  $1,330.88  $612.00  $718.88  43760  $118.57  $323.00  ($204.43) 
36832  $1,330.88  $612.00  $718.88  44360  $374.29  $433.00  ($58.71) 
36860  $971.66  $433.00  $538.66  44361  $374.29  $433.00  ($58.71) 
36861  $971.66  $495.00  $476.66  44388  $400.93  $323.00  $77.93 
37609  $327.07  $433.00  ($105.93)  45170  $888.26  $433.00  $455.26 
37720  $1,015.37  $495.00  $520.37  45305  $142.18  $323.00  ($180.82) 
37785  $743.06  $495.00  $248.06  45331  $142.18  $323.00  ($180.82) 
38500  $697.85  $433.00  $264.85  45333  $314.51  $323.00  ($8.49) 
38505  $271.81  $323.00  ($51.19)  45334  $314.51  $323.00  ($8.49) 
38510  $697.85  $433.00  $264.85  45338  $314.51  $323.00  ($8.49) 
38525  $697.85  $433.00  $264.85  45339  $314.51  $323.00  ($8.49) 
38740  $982.71  $433.00  $549.71  45378  $400.93  $433.00  ($32.07) 
38745  $982.71  $612.00  $370.71  45380  $400.93  $433.00  ($32.07) 
40814  $603.89  $433.00  $170.89  45382  $400.93  $433.00  ($32.07) 
41112  $603.89  $433.00  $170.89  45383  $400.93  $433.00  ($32.07) 
42104  $603.89  $433.00  $170.89  45384  $400.93  $433.00  ($32.07) 
42145  $625.50  $696.00  ($70.50)  45385  $400.93  $433.00  ($32.07) 
42440  $1,276.12  $495.00  $781.12  46040  $117.57  $495.00  ($377.43) 
42826  $935.49  $612.00  $323.49  46050  $117.57  $323.00  ($205.43) 
43200  $359.22  $323.00  $36.22  46080  $646.09  $495.00  $151.09 
43202  $359.22  $323.00  $36.22  46200  $888.26  $433.00  $455.26 
43215  $359.22  $323.00  $36.22  46255  $888.26  $495.00  $393.26 
43220  $359.22  $323.00  $36.22  46260  $888.26  $495.00  $393.26 
43226  $359.22  $323.00  $36.22  46270  $888.26  $495.00  $393.26 
43234  $359.22  $323.00  $36.22  47000  $271.81  $323.00  ($51.19) 
43235  $359.22  $323.00  $36.22  47525  $253.21  $323.00  ($69.79) 
43239  $359.22  $433.00  ($73.78)  48102  $271.81  $323.00  ($51.19) 
43241  $359.22  $433.00  ($73.78)  49080  $182.88  $433.00  ($250.12) 
43243  $359.22  $433.00  ($73.78)  49081  $182.88  $433.00  ($250.12) 
43245  $359.22  $433.00  ($73.78)  49180  $271.81  $323.00  ($51.19) 
43246  $359.22  $433.00  ($73.78)  49420  $985.73  $323.00  $662.73 
43247  $359.22  $433.00  ($73.78)  49421  $985.73  $323.00  $662.73 
15 
Payment Methodologies  OEI-05-00-00340  APPENDIX A 
HCPCS  OPD Rate  ASC Rate  Differences  HCPCS  OPD Rate  ASC Rate  Differences 
43248  $359.22  $433.00  ($73.78)  49505  $1,126.91  $612.00  $514.91 
43249  $359.22  $433.00  ($73.78)  49520  $1,126.91  $966.00  $160.91 
43250  $359.22  $433.00  ($73.78)  49525  $1,126.91  $612.00  $514.91 
43251  $359.22  $433.00  ($73.78)  49550  $1,126.91  $696.00  $430.91 
43255  $359.22  $433.00  ($73.78)  49560  $1,126.91  $612.00  $514.91 
43258  $359.22  $495.00  ($135.78)  49565  $1,126.91  $612.00  $514.91 
43259  $359.22  $495.00  ($135.78)  49585  $1,126.91  $612.00  $514.91 
43260  $529.04  $433.00  $96.04  50200  $271.81  $323.00  ($51.19) 
43261  $529.04  $433.00  $96.04  50390  $271.81  $323.00  ($51.19) 
43262  $529.04  $433.00  $96.04  50392  $272.80  $323.00  ($50.20) 
43264  $529.04  $433.00  $96.04  50393  $272.80  $323.00  ($50.20) 
43268  $529.04  $433.00  $96.04  50398  $253.21  $323.00  ($69.79) 
43269  $529.04  $433.00  $96.04  51010  $195.43  $323.00  ($127.57) 
43271  $529.04  $433.00  $96.04  51040  $878.72  $612.00  $266.72 
51710  $118.57  $323.00  ($204.43)  64420  $166.80  $323.00  ($156.20) 
51725  $195.43  $323.00  ($127.57)  64421  $166.80  $323.00  ($156.20) 
51726  $195.43  $323.00  ($127.57)  64510  $166.80  $323.00  ($156.20) 
51772  $195.43  $323.00  ($127.57)  64520  $166.80  $323.00  ($156.20) 
51785  $109.04  $323.00  ($213.96)  64620  $166.80  $323.00  ($156.20) 
52000  $272.80  $323.00  ($50.20)  64622  $166.80  $323.00  ($156.20) 
52005  $549.63  $433.00  $116.63  64623  $166.80  $323.00  ($156.20) 
52204  $549.63  $433.00  $116.63  64714  $701.36  $433.00  $268.36 
52214  $549.63  $433.00  $116.63  64718  $701.36  $433.00  $268.36 
52224  $549.63  $433.00  $116.63  64719  $701.36  $433.00  $268.36 
52234  $878.72  $433.00  $445.72  64721  $701.36  $433.00  $268.36 
52235  $878.72  $495.00  $383.72  64722  $701.36  $323.00  $378.36 
52240  $1,455.98  $495.00  $960.98  64727  $701.36  $323.00  $378.36 
52260  $549.63  $433.00  $116.63  65400  $303.45  $323.00  ($19.55) 
52275  $549.63  $433.00  $116.63  65420  $692.82  $433.00  $259.82 
52276  $549.63  $495.00  $54.63  65426  $692.82  $696.00  ($3.18) 
52281  $549.63  $433.00  $116.63  65730  $1,651.92  $966.00  $685.92 
52285  $549.63  $433.00  $116.63  65755  $1,651.92  $966.00  $685.92 
52310  $549.63  $433.00  $116.63  65805  $692.82  $323.00  $369.82 
52315  $549.63  $433.00  $116.63  65865  $692.82  $323.00  $369.82 
52317  $878.72  $323.00  $555.72  65875  $692.82  $612.00  $80.82 
52318  $878.72  $433.00  $445.72  66170  $1,036.97  $612.00  $424.97 
52332  $878.72  $433.00  $445.72  66172  $1,036.97  $612.00  $424.97 
52450  $878.72  $495.00  $383.72  66180  $1,036.97  $696.00  $340.97 
52500  $878.72  $495.00  $383.72  66250  $692.82  $433.00  $259.82 
52601  $1,455.98  $612.00  $843.98  66710  $303.45  $433.00  ($129.55) 
52640  $878.72  $433.00  $445.72  66821  $245.67  $433.00  ($187.33) 
54161  $684.27  $433.00  $251.27  66850  $1,333.89  $966.00  $367.89 
54520  $917.39  $495.00  $422.39  66852  $1,333.89  $612.00  $721.89 
54840  $917.39  $612.00  $305.39  66984  $1,333.89  $949.00  $384.89 
55040  $1,126.91  $495.00  $631.91  66985  $1,333.89  $806.00  $527.89 
55700  $248.20  $433.00  ($184.80)  66986  $1,333.89  $806.00  $527.89 
16 
Payment Methodologies  OEI-05-00-00340  APPENDIX A 
HCPCS  OPD Rate  ASC Rate  Differences  HCPCS  OPD Rate  ASC Rate  Differences 
56405  $119.57  $433.00  ($313.43)  67005  $1,706.18  $612.00  $1,094.18 
56605  $200.97  $323.00  ($122.03)  67010  $1,706.18  $612.00  $1,094.18 
57240  $938.50  $696.00  $242.50  67015  $1,706.18  $323.00  $1,383.18 
57410  $814.41  $433.00  $381.41  67031  $245.67  $433.00  ($187.33) 
57520  $814.41  $433.00  $381.41  67036  $1,706.18  $612.00  $1,094.18 
57522  $938.50  $433.00  $505.50  67038  $1,706.18  $696.00  $1,010.18 
58120  $726.99  $433.00  $293.99  67039  $1,706.18  $966.00  $740.18 
60220  $982.71  $433.00  $549.71  67040  $1,706.18  $966.00  $740.18 
61055  $182.88  $323.00  ($140.12)  67107  $1,706.18  $696.00  $1,010.18 
61070  $182.88  $323.00  ($140.12)  67108  $1,706.18  $966.00  $740.18 
62270  $150.72  $323.00  ($172.28)  67141  $147.71  $433.00  ($285.29) 
62273  $182.88  $323.00  ($140.12)  67255  $1,706.18  $495.00  $1,211.18 
62282  $182.88  $323.00  ($140.12)  67311  $903.83  $495.00  $408.83 
62350  $354.20  $433.00  ($78.80)  67312  $903.83  $612.00  $291.83 
62362  $561.19  $433.00  $128.19  67314  $903.83  $612.00  $291.83 
62367  $22.61  $433.00  ($410.39)  67880  $303.45  $495.00  ($191.55) 
62368  $22.61  $433.00  ($410.39)  67903  $676.74  $612.00  $64.74 
63650  $898.80  $433.00  $465.80  67904  $676.74  $612.00  $64.74 
64415  $166.80  $323.00  ($156.20)  67908  $676.74  $612.00  $64.74 
67911  $676.74  $495.00  $181.74 
67916  $676.74  $612.00  $64.74 
67917  $676.74  $612.00  $64.74 
67921  $676.74  $495.00  $181.74 
67923  $676.74  $612.00  $64.74 
67924  $676.74  $612.00  $64.74 
67950  $676.74  $433.00  $243.74 
67961  $676.74  $495.00  $181.74 
67966  $676.74  $495.00  $181.74 
68320  $676.74  $612.00  $64.74 
68720  $1,190.70  $612.00  $578.70 
68810  $132.64  $323.00  ($190.36) 
69110  $327.07  $323.00  $4.07 
69145  $327.07  $433.00  ($105.93) 
69436  $603.89  $495.00  $108.89 
69631  $1,276.12  $696.00  $580.12 
Source: OIG Analysis 
17 
Payment Methodologies  OEI-05-00-00340  APPENDIX B 
Number of Codes by Percent Differences

OPD rates greater than ASC rates 
Number of Codes  Percent Difference 
4  >200% 
69  100-199% 
88  50-99% 
118  1-49% 
Source: OIG Analysis 
ASC rates greater than OPD rates 
Number of Codes  Percent Difference 
12  >200% 
41  100-199% 
26  50-99% 
66  1-49% 
Source: OIG Analysis 
18 
Payment Methodologies  OEI-05-00-00340  APPENDIX C 
Analysis by BETOS Classification

# of  BETOS  BETOS Description  # OPD >  #ASC >  Potential Savings 
Procedure  Category  ASC  OPD 
Codes 
1  M5D  Specialist  1  0  $1,101,131 
Subtotal  1  0  $1,101,131 
3  P1A  Major Procedure - 3  0  $10,657,129 
Breast 
2  P1D  Major Procedure - 2  0  $13,050,648 
TURP 
27  P1G  Major Procedure - 15  12  $53,609,605 
Other 
Subtotal  20  12  $77,317,382 
12  P2F  Major Procedure - 10  2  $81,124,618 
Cardiovascular 
Subtotal  10  2  $81,124,618 
18  P3D  Major Procedure - 15  3  $48,464,759 
Orthopedic 
Subtotal  15  3  $48,464,759 
2  P4A  Eye Procedure  2  0  $5,865,302 
5  P4B  Eye Procedure - 5  0  $330,368,672 
Cataract 
3  P4C  Eye Procedure - 2  1  $12,610,047 
Retinal Detachment 
39  P4E  Eye Procedure - Other  32  7  $117,063,254 
Subtotal  41  8  $465,907,275 
37  P5A  Ambulatory  25  12  $18,888,083 
Procedures - Skin 
51  P5B  Ambulatory  47  4  $56,844,714 
Procedures -
Musculoskeletal 
4  P5C  Ambulatory  4  0  $39,355,713 
Procedures - Inguinal 
Hernia Repair 
73  P5E  Ambulatory  44  29  $90,049,680 
Procedures - Other 
Subtotal  120  45  $205,138,190 
12  P6A  Minor Procedures - 4  8  $4,318,404 
Skin 
22  P6B  Minor Procedures - 4  18  $2,061,819 
Musculoskeletal 
19 
Payment Methodologies  OEI-05-00-00340  APPENDIX C 
# of  BETOS  BETOS Description  # OPD >  #ASC >  Potential Savings 
Procedure  Category  ASC  OPD 
Codes 
20  P6C  Minor Procedures - 3  17  $8,517,772 
Other 
Subtotal  11  43  $14,897,995 
10  P8A  Endoscopy - 10  0  $96,335,979 
Arthroscopy 
26  P8B  Endoscopy - Upper  13  13  $28,370,205 
Gastrointestinal 
6  P8C  Endoscopy - 0  6  $928,643 
Sigmoidscopy 
7  P8D  Endoscopy - 1  6  $15,502,443 
Colonoscopy 
18  P8E  Endoscopy - 17  1  $64,500,588 
Cystoscopy 
7  P8F  Endoscopy - 3  4  $1,977,433 
Brochoscopy 
5  P8H  Endoscopy - 5  0  $8,060,606 
Laryngoscopy 
14  P8I  Endoscopy - Other  10  4  $16,835,749 
Subtotal  59  34  $232,511,646 
Total  279  145  $1,126,462,945 
Source: OIG Analysis 
20 
Payment Methodologies  OEI-05-00-00340  APPENDIX D 
Procedure Codes Identified for Removal from ASC List

21 
Payment Methodologies  OEI-05-00-00340  APPENDIX D 
HCPCS  OPD Rate  ASC Rate  Fee  Est. ASC  Est. OPD  Phys. Office 
Schedule  Reimbusement  Reimbursement  Reimbursement 
23620  $109.03  $323.00  $280.81  $0.00  $0.00  $0.00 
24670  $109.03  $323.00  $255.95  $0.00  $0.00  $0.00 
27786  $109.03  $323.00  $299.94  $0.00  $0.00  $0.00 
28400  $109.03  $323.00  $281.20  $0.00  $0.00  $0.00 
62367  $22.61  $433.00  $31.37  $155,880.00  $8,139.60  $11,293.79 
22305  $82.40  $323.00  $199.71  $323.00  $82.40  $199.71 
27780  $109.03  $323.00  $284.64  $323.00  $109.03  $284.64 
27760  $109.03  $323.00  $308.74  $323.00  $109.03  $308.74 
27520  $109.03  $323.00  $309.13  $323.00  $109.03  $309.13 
27808  $109.03  $323.00  $330.55  $646.00  $218.06  $661.10 
23600  $109.03  $323.00  $312.57  $969.00  $327.09  $937.71 
56405  $119.57  $433.00  $133.90  $4,763.00  $1,315.27  $1,472.94 
31235  $683.78  $323.00  $213.10  $3,553.00  $7,521.58  $2,344.07 
12021  $122.08  $323.00  $144.23  $6,783.00  $2,563.68  $3,028.89 
46050  $117.57  $323.00  $153.03  $6,783.00  $2,468.97  $3,213.68 
45305  $142.18  $323.00  $71.93  $17,442.00  $7,677.72  $3,883.96 
31233  $63.30  $433.00  $191.29  $9,959.00  $1,455.90  $4,399.68 
21920  $327.07  $323.00  $159.15  $11,628.00  $11,774.52  $5,729.53 
31570  $920.01  $433.00  $318.31  $9,959.00  $21,160.23  $7,321.07 
38505  $271.81  $323.00  $144.23  $17,119.00  $14,405.93  $7,644.35 
42104  $603.89  $433.00  $153.80  $28,578.00  $39,856.74  $10,150.64 
30801  $260.24  $323.00  $120.13  $33,269.00  $26,804.72  $12,373.43 
65805  $692.82  $323.00  $158.39  $31,977.00  $68,589.18  $15,680.46 
51710  $118.57  $323.00  $198.56  $27,778.00  $10,197.02  $17,076.12 
56605  $200.97  $323.00  $102.91  $55,556.00  $34,566.84  $17,701.26 
31238  $683.78  $323.00  $273.55  $33,915.00  $71,796.90  $28,722.27 
40814  $603.89  $433.00  $290.38  $43,300.00  $60,389.00  $29,037.90 
19100  $271.81  $323.00  $154.56  $74,613.00  $62,788.11  $35,703.99 
69145  $327.07  $433.00  $226.87  $71,012.00  $53,639.48  $37,206.77 
30802  $603.89  $323.00  $179.43  $72,675.00  $135,875.25  $40,371.86 
41112  $603.89  $433.00  $236.82  $82,703.00  $115,342.99  $45,232.17 
68810  $132.64  $323.00  $313.72  $53,941.00  $22,150.88  $52,390.64 
13100  $187.90  $433.00  $237.20  $99,590.00  $43,217.00  $54,556.05 
64420  $166.80  $323.00  $125.10  $143,089.00  $73,892.40  $55,421.07 
31525  $683.78  $323.00  $210.80  $85,918.00  $181,885.48  $56,073.37 
11446  $627.50  $433.00  $323.28  $93,961.00  $136,167.50  $70,151.97 
13120  $187.90  $433.00  $250.21  $127,302.00  $55,242.60  $73,561.14 
13150  $608.42  $495.00  $325.58  $133,650.00  $164,273.40  $87,905.64 
11624  $327.07  $433.00  $265.51  $182,726.00  $138,023.54  $112,045.73 
31237  $683.78  $433.00  $244.09  $202,644.00  $320,009.04  $114,232.57 
67141  $147.71  $433.00  $484.73  $104,786.00  $35,745.82  $117,304.69 
51725  $195.43  $323.00  $226.11  $178,296.00  $107,877.36  $124,810.16 
11424  $327.07  $433.00  $211.57  $285,347.00  $215,539.13  $139,422.85 
20670  $527.02  $323.00  $241.03  $190,570.00  $310,941.80  $142,205.36 
11604  $327.07  $433.00  $221.13  $290,543.00  $219,463.97  $148,379.45 
11444  $327.07  $323.00  $263.98  $197,353.00  $199,839.77  $161,292.32 
67031  $245.67  $433.00  $299.56  $287,945.00  $163,370.55  $199,208.01 
62368  $22.61  $433.00  $42.08  $2,105,246.00  $109,929.82  $204,611.97 
15740  $793.81  $433.00  $781.61  $115,611.00  $211,947.27  $208,690.67 
11404  $327.07  $323.00  $189.00  $366,282.00  $370,897.38  $214,320.35 
13101  $187.90  $495.00  $285.02  $456,885.00  $173,431.70  $263,076.09 
51772  $195.43  $323.00  $200.86  $446,709.00  $270,279.69  $277,782.50 
22 
Payment Methodologies  OEI-05-00-00340  APPENDIX D 
HCPCS  OPD Rate  ASC Rate  Fee  Est. ASC  Est. OPD  Phys. Office 
Schedule  Reimbusement  Reimbursement  Reimbursement 
13131  $187.90  $433.00  $283.11  $574,591.00  $249,343.30  $375,686.89 
13121  $187.90  $495.00  $314.10  $595,980.00  $226,231.60  $378,175.20 
13151  $187.90  $495.00  $355.42  $550,440.00  $208,944.80  $395,224.54 
14000  $608.42  $433.00  $493.15  $355,060.00  $498,904.40  $404,380.47 
11644  $327.07  $433.00  $336.29  $547,745.00  $413,743.55  $425,405.20 
14021  $608.42  $495.00  $746.80  $297,495.00  $365,660.42  $448,825.67 
13152  $187.90  $495.00  $479.76  $546,975.00  $207,629.50  $530,131.01 
67921  $676.74  $495.00  $444.18  $643,995.00  $880,438.74  $577,873.68 
14020  $608.42  $495.00  $554.74  $820,215.00  $1,008,151.94  $919,208.24 
14061  $608.42  $495.00  $925.85  $508,860.00  $625,455.76  $951,769.71 
14041  $608.42  $495.00  $840.15  $654,390.00  $804,331.24  $1,110,675.49 
13132  $187.90  $495.00  $419.69  $1,848,825.00  $701,806.50  $1,567,547.22 
51726  $195.43  $323.00  $205.45  $2,660,874.00  $1,609,952.34  $1,692,464.12 
52281  $549.63  $433.00  $239.88  $3,458,371.00  $4,389,894.81  $1,915,907.88 
55700  $248.20  $433.00  $184.40  $7,684,884.00  $4,405,053.60  $3,272,802.94 
14040  $608.42  $433.00  $632.02  $3,126,260.00  $4,392,792.40  $4,563,211.92 
14060  $608.42  $495.00  $682.52  $4,511,925.00  $5,545,748.30  $6,221,210.85 
52000  $272.80  $323.00  $185.55  $14,508,191.00  $12,253,357.60  $8,334,429.53 
26605  $109.03  $433.00  $313.72  $4,763.00  $1,199.33  $3,450.88 
52285  $549.63  $433.00  $361.16  $238,583.00  $302,846.13  $198,997.21 
Total Expenditures  $51,088,968.00  $43,374,896.63  $37,507,111.11 
Total Savings  $7,714,071.37  $13,581,856.90 
Source: OIG Analysis 
23 
Payment Methodologies  OEI-05-00-00340  APPENDIX E 
Agency Comments

24 
Payment Methodologies  OEI-05-00-00340  APPENDIX E 
25 
Payment Methodologies  OEI-05-00-00340  APPENDIX E 
26 
Payment Methodologies  OEI-05-00-00340  A C K N O W L E D G M E N T S  
This report was prepared under the direction of William C. Moran, Regional Inspector General for 
Evaluation and Inspections in Chicago, Brian T. Pattison in Kansas City, and Natalie Coen, Deputy 
Regional Inspector General.  Other principal Office of Evaluation and Inspections staff who contributed 
include: 
Thomas F. Komaniecki, Project Leader  Linda Frisch, Program Specialist 
Michael Barrett, Lead Analyst  Linda Paddock, Program Analyst 
For information or copies of this report, please contact 

the Office of Inspector Generals

Public Affairs office at (202) 619-1343. 

Reports are also available on the World Wide Web at our home page address:

http://www.oig.hhs.gov/ 
27 
Payment Methodologies  OEI-05-00-00340