Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JANET REHNQUIST 

Inspector General 

JANUARY 2003 

OEI-05-00-00340 

Payment for Procedures in Outpatient 

Departments and Ambulatory Surgical 

Centers 
OFFICE OF INSPECTOR GENERAL

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 OIG’s 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. 
EXECUTIVE SUMMARY 

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 

Payment Methodologies i 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 CMS’s 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 

Commission’s 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. 

Payment Methodologies ii 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 CMS’s 

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 CMS’s criteria for removal 

from the ASC-covered procedure list will continue to be reimbursed as ASC-covered 

procedures resulting in higher program payments. 

Payment Methodologies iii OEI-05-00-00340 
TABLE OF CONTENTS 

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

Payment Methodologies iv OEI-05-00-00340 
INTRODUCTION 

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 

Payment Methodologies 1 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 President’s 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 patient’s medical diagnosis, the availability of different settings, ownership 

interests, a physician’s admitting privileges, and payment. 

Except the physician’s office, two claims are submitted when a service is provided in an 

ambulatory setting. One claim represents the physician’s 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 physician’s 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 hospital’s 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 hospital’s 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 

3

Review of the Health Care Financing Administration’s Development of Medicare’s 

Prospective Payment System for Hospital Outpatient Department Services (A-14-98-00400) 

Payment Methodologies 2 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. 

Payment Methodologies 3 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 physician’s 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. 

Payment Methodologies 4 OEI-05-00-00340 
To determine whether certain procedure codes should have been removed from the ASC list of 

covered services, we used CMS’s criteria for removing procedure codes from the ASCcovered list. The CMS’s 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 procedure’s total volume, and the procedure 

needs to be performed more than 50 percent of the time in a physician’s office. We used siteof-service volume data from CY 1999. 

After determining which procedure codes met CMS’s 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 physician’s office instead of an 

ASC. In this case, we compared the full 2001 physician’s 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 President’s Council on Integrity and Efficiency. 

Payment Methodologies 5 OEI-05-00-00340 
FINDINGS 

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 

Payment Methodologies 6 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 BerensonEggers 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.) 

Payment Methodologies 7 OEI-05-00-00340 
Table 1 Savings by BETOS Categories 

# of Procedure 

Codes 

BETOS 

Category 

BETOS 

Description 

OPD > ASC ASC > OPD Potential Savings 

1 M5 Specialist 1 0 $1,101,131 

32 P1 Major ProcedureOther 20 12 $77,317,382 

12 P2 Major Procedure -

Cardiovascular 

10 2 $81,124,618 

18 P3 Major Procedure -

Orthopedic 

15 3 $48,464,759 

49 P4 Eye Procedures 41 8 $465,907,275 

165 P5 Ambulatory 

Procedures 

120 45 $205,138,190 

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 

4

Review of the Health Care Financing Administration’s Development of Medicare’s 

Prospective Payment System for Hospital Outpatient Department Services (A-14-98-00400) 

Payment Methodologies 8 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 ASCcovered 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 CMS’s 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 ASCcovered 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.) 

Payment Methodologies 9 OEI-05-00-00340 
CONCLUSION AND 

RECOMMENDATION 

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 

Commission’s 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 

Payment Methodologies 10 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 CMS’s 

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 CMS’s 

criteria for removal from the ASC-covered procedure list will continue to be reimbursed as 

ASC-covered procedures resulting in higher program payments. 

Payment Methodologies 11 OEI-05-00-00340 
APPENDIX A 

Procedure Codes Examined with ASC and OPD Rates

Payment Methodologies 12 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 

Payment Methodologies 13 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) 

Payment Methodologies 14 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 

Payment Methodologies 15 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 

Payment Methodologies 16 OEI-05-00-00340 
APPENDIX A 

HCPCS OPD Rate ASC Rate Differences HCPCS OPD Rate ASC Rate Differences 

56405 $119.57 

56605 $200.97 

57240 $938.50 

57410 $814.41 

57520 $814.41 

57522 $938.50 

58120 $726.99 

60220 $982.71 

61055 $182.88 

61070 $182.88 

62270 $150.72 

62273 $182.88 

62282 $182.88 

62350 $354.20 

62362 $561.19 

62367 $22.61 

62368 $22.61 

63650 $898.80 

64415 $166.80 

67911 $676.74 

67916 $676.74 

67917 $676.74 

67921 $676.74 

67923 $676.74 

67924 $676.74 

67950 $676.74 

67961 $676.74 

67966 $676.74 

68320 $676.74 

68720 $1,190.70 

68810 $132.64 

69110 $327.07 

69145 $327.07 

69436 $603.89 

69631 $1,276.12 

Source: OIG Analysis 

$433.00 ($313.43) 67005 $1,706.18 $612.00 $1,094.18 

$323.00 ($122.03) 67010 $1,706.18 $612.00 $1,094.18 

$696.00 $242.50 67015 $1,706.18 $323.00 $1,383.18 

$433.00 $381.41 67031 $245.67 $433.00 ($187.33) 

$433.00 $381.41 67036 $1,706.18 $612.00 $1,094.18 

$433.00 $505.50 67038 $1,706.18 $696.00 $1,010.18 

$433.00 $293.99 67039 $1,706.18 $966.00 $740.18 

$433.00 $549.71 67040 $1,706.18 $966.00 $740.18 

$323.00 ($140.12) 67107 $1,706.18 $696.00 $1,010.18 

$323.00 ($140.12) 67108 $1,706.18 $966.00 $740.18 

$323.00 ($172.28) 67141 $147.71 $433.00 ($285.29) 

$323.00 ($140.12) 67255 $1,706.18 $495.00 $1,211.18 

$323.00 ($140.12) 67311 $903.83 $495.00 $408.83 

$433.00 ($78.80) 67312 $903.83 $612.00 $291.83 

$433.00 $128.19 67314 $903.83 $612.00 $291.83 

$433.00 ($410.39) 67880 $303.45 $495.00 ($191.55) 

$433.00 ($410.39) 67903 $676.74 $612.00 $64.74 

$433.00 $465.80 67904 $676.74 $612.00 $64.74 

$323.00 ($156.20) 67908 $676.74 $612.00 $64.74 

$495.00 $181.74 

$612.00 $64.74 

$612.00 $64.74 

$495.00 $181.74 

$612.00 $64.74 

$612.00 $64.74 

$433.00 $243.74 

$495.00 $181.74 

$495.00 $181.74 

$612.00 $64.74 

$612.00 $578.70 

$323.00 ($190.36) 

$323.00 $4.07 

$433.00 ($105.93) 

$495.00 $108.89 

$696.00 $580.12 

Payment Methodologies 17 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 

Payment Methodologies 18 OEI-05-00-00340 
APPENDIX C 

Analysis by BETOS Classification

# of 

Procedure 

Codes 

BETOS 

Category 

BETOS Description # OPD > 

ASC 

#ASC > 

OPD 

Potential Savings 

1 M5D Specialist 1 0 $1,101,131 

Subtotal 1 0 $1,101,131 

3 P1A Major Procedure -

Breast 

3 0 $10,657,129 

2 P1D Major Procedure -

TURP 

2 0 $13,050,648 

27 P1G Major Procedure -

Other 

15 12 $53,609,605 

Subtotal 20 12 $77,317,382 

12 P2F Major Procedure -

Cardiovascular 

10 2 $81,124,618 

Subtotal 10 2 $81,124,618 

18 P3D Major Procedure -

Orthopedic 

15 3 $48,464,759 

Subtotal 15 3 $48,464,759 

2 P4A Eye Procedure 2 0 $5,865,302 

5 P4B Eye Procedure -

Cataract 

5 0 $330,368,672 

3 P4C Eye Procedure -

Retinal Detachment 

2 1 $12,610,047 

39 P4E Eye Procedure - Other 32 7 $117,063,254 

Subtotal 41 8 $465,907,275 

37 P5A Ambulatory 

Procedures - Skin 

25 12 $18,888,083 

51 P5B Ambulatory 

Procedures -

Musculoskeletal 

47 4 $56,844,714 

4 P5C Ambulatory 

Procedures - Inguinal 

Hernia Repair 

4 0 $39,355,713 

73 P5E Ambulatory 

Procedures - Other 

44 29 $90,049,680 

Subtotal 120 45 $205,138,190 

12 P6A Minor Procedures -

Skin 

4 8 $4,318,404 

22 P6B Minor Procedures -

Musculoskeletal 

4 18 $2,061,819 

Payment Methodologies 19 OEI-05-00-00340 
APPENDIX C 

# of 

Procedure 

Codes 

BETOS 

Category 

BETOS Description # OPD > 

ASC 

#ASC > 

OPD 

Potential Savings 

20 P6C Minor Procedures -

Other 

3 17 $8,517,772 

Subtotal 11 43 $14,897,995 

10 P8A Endoscopy -

Arthroscopy 

10 0 $96,335,979 

26 P8B Endoscopy - Upper 

Gastrointestinal 

13 13 $28,370,205 

6 P8C Endoscopy -

Sigmoidscopy 

0 6 $928,643 

7 P8D Endoscopy -

Colonoscopy 

1 6 $15,502,443 

18 P8E Endoscopy -

Cystoscopy 

17 1 $64,500,588 

7 P8F Endoscopy -

Brochoscopy 

3 4 $1,977,433 

5 P8H Endoscopy -

Laryngoscopy 

5 0 $8,060,606 

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 

Payment Methodologies 20 OEI-05-00-00340 
APPENDIX D 

Procedure Codes Identified for Removal from ASC List

Payment Methodologies 21 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 

Payment Methodologies 22 OEI-05-00-00340 
APPENDIX D 

HCPCS OPD Rate ASC Rate Fee 

Schedule 

13131 $187.90 $433.00 $283.11 

13121 $187.90 $495.00 $314.10 

13151 $187.90 $495.00 $355.42 

14000 $608.42 $433.00 $493.15 

11644 $327.07 $433.00 $336.29 

14021 $608.42 $495.00 $746.80 

13152 $187.90 $495.00 $479.76 

67921 $676.74 $495.00 $444.18 

14020 $608.42 $495.00 $554.74 

14061 $608.42 $495.00 $925.85 

14041 $608.42 $495.00 $840.15 

13132 $187.90 $495.00 $419.69 

51726 $195.43 $323.00 $205.45 

52281 $549.63 $433.00 $239.88 

55700 $248.20 $433.00 $184.40 

14040 $608.42 $433.00 $632.02 

14060 $608.42 $495.00 $682.52 

52000 $272.80 $323.00 $185.55 

26605 $109.03 $433.00 $313.72 

52285 $549.63 $433.00 $361.16 

Est. ASC Est. OPD Phys. Office 

Reimbusement Reimbursement Reimbursement 

$574,591.00 $249,343.30 $375,686.89 

$595,980.00 $226,231.60 $378,175.20 

$550,440.00 $208,944.80 $395,224.54 

$355,060.00 $498,904.40 $404,380.47 

$547,745.00 $413,743.55 $425,405.20 

$297,495.00 $365,660.42 $448,825.67 

$546,975.00 $207,629.50 $530,131.01 

$643,995.00 $880,438.74 $577,873.68 

$820,215.00 $1,008,151.94 $919,208.24 

$508,860.00 $625,455.76 $951,769.71 

$654,390.00 $804,331.24 $1,110,675.49 

$1,848,825.00 $701,806.50 $1,567,547.22 

$2,660,874.00 $1,609,952.34 $1,692,464.12 

$3,458,371.00 $4,389,894.81 $1,915,907.88 

$7,684,884.00 $4,405,053.60 $3,272,802.94 

$3,126,260.00 $4,392,792.40 $4,563,211.92 

$4,511,925.00 $5,545,748.30 $6,221,210.85 

$14,508,191.00 $12,253,357.60 $8,334,429.53 

$4,763.00 $1,199.33 $3,450.88 

$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 

Payment Methodologies 23 OEI-05-00-00340 
APPENDIX E 

Agency Comments

Payment Methodologies 24 OEI-05-00-00340 
APPENDIX E 

Payment Methodologies 25 OEI-05-00-00340 
APPENDIX E 

Payment Methodologies 26 OEI-05-00-00340 
ACKNOWLEDGMENTS 

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 General’s

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/ 

Payment Methodologies 27 OEI-05-00-00340