ASC Billing & Hospital Outpatient Billing – Understanding the Differences

Medical billing consists of hundreds of pages of updated rules, regulations, and legislation, not to mention thousands of billing codes. And, navigating them is already a challenge for practices. Over the last few years, patients and insurers have continued to pressure the health system and hospitals to move towards ambulatory surgery centre (ASC) billing from hospital outpatient department billing (HOPD). The reason is ASCs billing can be a cost-saving procedure. But to understand how it can be cost-saving, one needs to understand the difference between ASC and HOPD.

The Difference between ASC & HOPD

The primary difference between ASC and HOPD is based on the regulations that apply to the centres. For instance, a stand-alone surgery centre can still be termed as HOPD when it falls under the same administrative and financial contracts as a hospital that is within a 35-mile radius.

On the other hand, a facility can have the ASC status despite being operated by a hospital facility if it has an independent administrative and financial standing and its own agreement with Medicare.

Adding to this, ASC needs to comply with the ASC Covered Procedure List. It is a mandatory rule to follow to ensure that any procedures performed can meet the recommended level of risks being a stand-alone centre.

The other difference that must be taken into account between ASC and HOPD is that while the former is considered a freestanding facility, HOPD is attached to a hospital.

How Is Payment Different Between ASC & HOPD?

There is a difference in the methodology between ASC and HOPD operations, which leads to the payment difference.

Both use Medicare; however, when a surgery shifts to ASC from HOPD, the Medicare payment method changes to the ASC fee schedule from Outpatient Perspective Payment System (OPPS).

Despite the ASC fee schedule being connected with the OPPS payments, the calculations, inputs, and adjustment changes, making it less expensive than HOPD.

While several payment mythology differences result in ASC being cheaper than HOPD, three main factors contribute to the differences.

1. The Value System – Relative weight

The critical factor that differs between ASC and HOPD is the numerical value linked to the service provided, known as relative weight. The figures are defined by the Centre for Medicare and Medicaid Services (CMS).

The CMS uses it to reach the national allowable rate for Medicare by multiplying the value with the conversion rate.

This results in lower relative weight for the ASC due to the OPPS’s proportional adjustments for budget neutrality.

2. Change in Conversion Factor 

As mentioned in the previous point, the conversion rate is the factor that leads to the change in the pricing between the procedures done by ASC and HOPD.

The conversion factor for ASC was earlier based on the Consumer Price Index, but now it uses the hospital market basket. In addition, due to site neutrality, the change pushes for the migration of services to ASC settings from hospitals.

3. The Wage Index 

Irrespective of whether it is HOPD or ASC, the national Medicare allowable rate is determined for the procedure based on the geographical wage index. It is done by calculating the average hourly wage of the labor market of a geographic location to the national average hourly wage. As a result, the wage index adjustments based on the geographic location vary between the services provided for ASC and HOPD.

Generally, the ASC’s allowable rate is adjusted by 50% compared to HOPDs by 60%. The difference in the weightage and the methodology thus impacts the payment rates between the two.

How To Handle the Differences?

We understand that you are already neck-deep in keeping up with all the coding and billing changes while attending to the patients. However, understanding and calculating the difference between ASC and HOPD can be challenging for practice. Moreover, frequent changes in the rules and regulations can add to the woes. 

Let 24/7 Medical Billing Services help you with the ASC and HOPD billings. Our team of experts has in-depth knowledge of both ASC medical billing services and Hospital medical billing services and understand the difference between the ASC Billing & Hospital Outpatient Billing to ensure you have a regular flow of revenue for the procedures done. In addition, we can assure you that you will have little to no claim rejections, thus helping you focus on providing better services to the patients.

Read more: Difference Between ASC & Hospital Billing Services

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