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Medicare ASC Billing

The ASC Payment System: Ratesetting, Packaging, Payment Indicators, Adjustments, and Claim Construction

A detailed operational guide to Medicare ASC payment methodology, claim construction, packaging, payment indicators, device rules, multiple-procedure and terminated-procedure adjustments, beneficiary liability, and billing integrity.

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Publication and Use Information. This page is an educational and operational reference. It is not medical, legal, compliance, coding, or reimbursement advice and does not replace independent clinical judgment or verification of the payer, regulatory, coding, and payment requirements in effect for the specific patient and date of service. Authorization does not guarantee coverage or payment.

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Use the links below to move directly to each section.

Guide Sections 1-8

1. Overview
2. Evidence at a Glance
3. The Architecture of the ASC Payment System
4. What Medicare Pays the ASC For
5. Beneficiary Liability, Coinsurance, and Deductible
6. What Medicare Does Not Pay the ASC For
7. Ratesetting: How the ASC Rate Is Built
8. Documentation Supporting the Facility Claim

Guide Sections 9-16

9. Covered Ancillary Services
10. Packaging: What Is Included in the Procedure Payment
11. Payment Indicators and the Annual Addenda
12. Payment Adjustments and How They Interact
13. The Claim Construction Workflow
14. Common Billing Errors and Denials
15. Overpayments, Appeals, and Reopenings
16. Coding and Billing Overview

Guide Sections 17-24

17. Procedure Code Reporting
18. Drugs, Biologicals, Devices, and Supplies
19. Diagnosis Reporting
20. ASC Modifiers
21. ASC Billing Checklist
22. ASC and Hospital Outpatient Payment Comparison
23. GoHealthcare Clinical Insights
24. GoHealthcare Leadership Perspective

Guide Sections 25-32

25. GoHealthcare Case Study
26. GoHealthcare Best Practices
27. Common Mistakes
28. Pearls and Pitfalls
29. Frequently Asked Questions
30. Key Takeaways
31. Future Outlook
32. References

Guide Sections 33-38

33. Reading Recommendations
34. Related GoHealthcare Resources
35. Recommended Downloads
36. Visual Recommendations
37. Educational Disclaimer

01

Overview

The Medicare ASC payment system is smaller and simpler than the hospital outpatient prospective payment system, and that simplicity is deceptive. It has fewer moving parts, but each part behaves in a specific way, and the errors it produces are quiet: a packaged item billed separately, a payment indicator misread, a multiple procedure reduction misapplied, a device credit unreported. None of these announce themselves. They surface as a variance nobody can explain, or as an audit finding years later.

This guide sets out how the ASC payment system actually works: how a rate is built, what is packaged into it, what is separately payable, how the payment indicators drive the workflow, how the adjustments interact, and how a clean facility claim is constructed. It is written for the people who have to make the claim right rather than for those analyzing performance after the fact.

A deliberate scope exception

The GoHealthcare Clinical Procedure Guide Standard v1.0 directs that detailed reimbursement methodology, fee schedules, payment rates, and extensive revenue cycle analysis be excluded from procedure guides and addressed in the Revenue Cycle Knowledge Center. This guide is the designated exception. Payment methodology is its subject, and the limitation is deliberately relaxed here. What remains outside scope is performance analytics, denial management program design, underpayment recovery, and key performance indicator frameworks, all of which are addressed in Guide B04-09.

The CY 2026 context

ASC rates increased 2.6 percent for CY 2026, based on a 3.3 percent hospital market basket increase reduced by a 0.7 percentage point productivity adjustment. The resulting conversion factor is $56.322 for ASCs meeting Ambulatory Surgical Center Quality Reporting Program requirements and $55.224 for those that do not. Total Medicare payments to ASCs for CY 2026 are estimated at approximately $9.2 billion, roughly $450 million above CY 2025, across approximately 6,000 Medicare-certified ASCs. Against that backdrop, CMS added 560 surgical procedures to the Covered Procedures List and began a three-year elimination of the Inpatient Only list, which will change the case mix flowing through this payment system materially over the next several years.

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02

Evidence at a Glance

Domain	Current position (2026)
Payment system authority	Section 1833(i) of the Social Security Act; 42 CFR Part 416, Subpart F. Operational guidance in the Medicare Claims Processing Manual, Publication 100-04, Chapter 14.
Claim format	Professional claim format - CMS-1500 or the 837 professional transaction - not the institutional format used by hospital outpatient departments. Place of service 24.
CY 2026 conversion factor	$56.322 for ASCs meeting ASCQR requirements; $55.224 for ASCs that do not. The CY 2025 conversion factor was $54.895.
CY 2026 update	2.6 percent, based on a 3.3 percent hospital market basket increase reduced by a 0.7 percentage point productivity adjustment.
ASCQR non-compliance	A 2.0 percentage point reduction to the annual update, producing the lower conversion factor and applying to every case for the year.
Rate construction	For most covered surgical procedures, the ASC rate is the product of the conversion factor and the procedure's ASC relative payment weight, adjusted for area wages.

Domain	Current position (2026)
Wage adjustment	The ASC wage index is applied to a 50 percent labor-related portion for covered surgical procedures and certain covered ancillary services. This differs from the OPPS labor-related share.
Office-based procedures and ancillary radiology	Paid at the lesser of the Medicare Physician Fee Schedule non-facility practice expense amount or the ASC rate under the standard methodology, for services added to the ASC list in CY 2008 or later. Which applies can change from year to year.
Packaging	The default. Services, drugs, devices, and supplies packaged into the covered surgical procedure allowance must not be separately reported or separately charged.
Multiple procedures	The highest-valued procedure is paid at 100 percent of the ASC rate; additional procedures in the same session are paid at 50 percent, where the procedure is subject to the reduction.
Terminated procedures	Modifier 73, terminated before anesthesia induction or procedure initiation: 50 percent payment, not subject to the multiple procedure reduction. Modifier 74, terminated after: full payment, and may be subject to the multiple procedure reduction if the procedure otherwise is. Modifier 52 for discontinued procedures not requiring anesthesia: 50 percent reduction, not subject to the multiple procedure reduction.
Device credits	Modifiers FB and FC. See Guide B04-03.
Annual addenda	Addendum AA (covered surgical procedures and payment indicators), Addendum BB (covered ancillary services), Addendum DD1 and DD2 (payment indicator and comment indicator definitions), Addendum EE (procedures excluded from ASC payment), Addendum FF (device offset percentages and device portions). Updated annually and quarterly.
Beneficiary liability	Part B deductible and coinsurance apply. Coinsurance for ASC services is generally 20 percent of the Medicare-approved amount, with the applicable amount identified on the remittance.

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03

The Architecture of the ASC Payment System

Four structural features distinguish the ASC payment system, and nearly every billing error traces back to one of them.

Feature	What it means	Where it bites
The professional claim format	ASCs bill facility services on the CMS-1500 or 837 professional transaction. There are no revenue codes, no value codes, no condition codes, and no occurrence codes.	Mechanisms available to hospitals - value code FD for device credits, condition codes, modifier CG for the device edit - are simply unavailable. ASC-specific alternatives exist and must be used.
Payment is derived from OPPS	ASC relative payment weights are generally derived from OPPS relative weights, then scaled by the ASC conversion factor.	ASC rates move when OPPS weights move, for reasons that have nothing to do with ASC costs. Rate changes are frequently misattributed.
Packaging is the default	Payment for a covered surgical procedure includes the facility services, supplies, drugs, and devices integral to it, except where a specific exception applies.	The instinct to bill for a costly item is usually wrong. Separate billing of packaged items is a compliance exposure, not an underpayment recovery.
The payment indicator drives everything	Each code carries a payment indicator that determines whether and how it is paid, and whether other reporting obligations attach.	Reading the indicator is the first step in constructing any ASC claim. Facilities that assign codes without checking the indicator produce predictable failures.

What the ASC payment covers

Under the ASC payment system, the facility payment for a covered surgical procedure encompasses the facility services furnished in connection with it. Physicians' services are paid separately under the Medicare Physician Fee Schedule, based on facility practice expense relative value units, and include the services of anesthesiologists administering or supervising anesthesia and the beneficiary's recovery from it, along with routine pre-operative and post-operative

services the physician customarily includes in the surgical fee.

GoHealthcare Clinical Insight: three claims, one encounter

A single ASC case generates a facility claim from the ASC, a professional claim from the operating physician, and an anesthesia claim from the anesthesia provider - three separate billing entities, three separate payment determinations, and in some payer configurations three separate authorization requirements.

The facility claim is the ASC's own representation. It stands or falls on the ASC's own coding, documentation, and compliance, regardless of what the physician bills or collects. Facilities that treat the professional claim as a proxy for their own position - assuming that if the surgeon was paid, the facility should have been - are reasoning from the wrong document.

The corollary matters more: the ASC and the physician should report the same procedure code for the same service. Divergence between the facility and professional claims on the same case is an audit signal and a denial driver, and it is visible to the payer even when it is invisible to the facility.

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04

What Medicare Pays the ASC For

Category	Treatment
Covered surgical procedures	Procedures on the ASC Covered Procedures List, paid at the ASC rate. Eligibility criteria are at 42 CFR 416.166(b)(2), restructured effective January 1, 2026. See Guide B04-06.
Facility services integral to the procedure	Nursing, technician, and related services; use of the facility; drugs, biologicals, and supplies for which separate payment is not allowed; equipment; surgical dressings; administrative and recordkeeping services. Packaged into the procedure payment.
Covered ancillary services	Defined categories eligible for separate payment when integral to a covered surgical procedure, identified in the annual Addendum BB. Addressed in Section 9.
Separately payable drugs and biologicals	Drugs and biologicals eligible for separate payment, generally paid at average sales price plus 6 percent, with rates updated quarterly.
Pass-through devices	Devices with active transitional pass-through status, separately payable when provided integral to a covered surgical procedure. See Guide B04-03.
Non-opioid pain management products	CMS finalized continuation of temporary additional payments for qualifying non-opioid treatments for pain relief in both the hospital outpatient department and ASC settings through December 31, 2027, with five drugs and eleven devices identified as separately payable in both settings starting in CY 2026. Eligibility generally requires that the product not have pass-through status and not already be separately payable.
Corneal tissue acquisition, brachytherapy sources, and certain other defined items	Paid under their own methodologies where applicable.
New technology intraocular lenses	Subject to a distinct payment adjustment where the lens carries that designation.

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05

Beneficiary Liability, Coinsurance, and Deductible

Element	Application
Part B deductible	Applies to ASC services. The annual deductible amount changes each calendar year and should be verified rather than carried forward.

Element	Application
Coinsurance	Part B coinsurance applies, generally 20 percent of the Medicare-approved amount. The applicable beneficiary liability is identified on the remittance advice and should be collected against that rather than estimated.
Assignment	ASCs accept assignment for Medicare services. Balance billing a Medicare beneficiary above the approved amount for covered services is not permitted.
Non-covered services	Where a service is expected to be denied as not reasonable and necessary, an Advance Beneficiary Notice of Non-coverage must be issued in advance and the GA modifier applied. Where the service is statutorily excluded, the ABN is voluntary and GX applies. Where denial is expected and no notice was issued, GZ applies and liability cannot be transferred. See Guides B04-04 and B04-05.
Medicare Secondary Payer	Where Medicare is secondary, MSP rules govern the order of payment and the facility's obligations. Under the ASC prior authorization demonstration, prior authorization should be obtained and the unique tracking number reported where Medicare payment is sought as secondary payer. See Guide B04-01.
Financial counseling	Anticipated non-covered services and material beneficiary liability should be discussed before the date of service, with notice executed in advance. This is a patient obligation as much as a financial control.

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06

What Medicare Does Not Pay the ASC For

Item	Why	Where it belongs
Physicians' services	Paid separately under the Medicare Physician Fee Schedule based on facility practice expense relative value units.	The physician's professional claim.
Anesthetists' services	Not an ASC facility service.	The anesthesia provider's claim.
Radiology services not integral to a covered surgical procedure	Outside the scope of ASC services except as a covered ancillary service.	The rendering entity's claim.
Diagnostic procedures not directly related to a covered surgical procedure	Outside the scope of ASC services.	The rendering entity's claim.
Ambulance services	Outside the scope of ASC services.	The ambulance supplier.
Braces other than those serving the function of a cast or splint	Outside the scope of ASC services.	The DMEPOS supplier.
Artificial limbs	Outside the scope of ASC services.	The prosthetics supplier.
Non-implantable prosthetic devices and durable medical equipment	Outside the scope of ASC services.	The DMEPOS supplier.
Procedures excluded from ASC payment	Identified in the annual Addendum EE, including procedures reportable only with an unlisted surgical procedure code.	Another setting, or not billed to Medicare as an ASC facility service.
Packaged items billed separately	Payment is already included in the procedure allowance.	Nowhere. Separate billing is an overpayment exposure.

Separate billing of packaged items is not underpayment recovery

When a facility absorbs a large cost inside a packaged payment, the instinct is to look for a way to bill it. Under the ASC payment system that instinct is usually wrong, and acting on it creates exposure rather than revenue.

ASCs must not report separate line items or separate charges for services, drugs, devices, or supplies packaged into the payment allowance for a covered surgical procedure. Where the packaged payment does not cover the cost, the answer is case selection, contracting, supply chain, or a rate comment to CMS - not a line item.

The legitimate question is whether the item is genuinely packaged. That is answered by the payment indicator and the addenda, not by cost. A charge master built on what things cost rather than on what is separately payable will produce both missed revenue and compliance risk simultaneously.

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07

Ratesetting: How the ASC Rate Is Built

The standard methodology

For most covered surgical procedures, the national unadjusted ASC payment rate is the product of the ASC conversion factor and the procedure's ASC relative payment weight. Relative payment weights are generally derived from the OPPS relative payment weights for the same services, scaled for budget neutrality within the ASC system. The national rate is then adjusted for area wage differences.

Step	Component	CY 2026 detail
1	Conversion factor	$56.322 for ASCs meeting ASCQR requirements; $55.224 for those that do not. The prior year conversion factor was $54.895, updated by the applicable factor and budget neutrality adjustments.
2	ASC relative payment weight	Generally derived from the OPPS relative payment weight for the service, scaled within the ASC system. Published in the annual Addendum AA.
3	National unadjusted rate	Conversion factor multiplied by relative payment weight.
4	Wage adjustment	The ASC wage index is applied to a 50 percent labor-related portion for covered surgical procedures and certain covered ancillary services. The remaining 50 percent is not wage adjusted.
5	Payment adjustments	Multiple procedure reduction, terminated procedure adjustment, device-intensive methodology, device credit reduction, and any other applicable adjustment.
6	Beneficiary liability	Part B deductible and coinsurance applied against the approved amount.

The alternative methodologies

Category	Methodology
Office-based surgical procedures added to the ASC list in CY 2008 or later, and covered ancillary radiology services	Paid at the lesser of the Medicare Physician Fee Schedule non-facility practice expense amount or the ASC rate under the standard methodology. Because the comparison is recalculated annually, the same code may be paid under the MPFS-based amount in one year and the standard ASC amount in another.
Device-intensive procedures	Paid at an adjusted rate reflecting a larger device portion, where the device offset exceeds 30 percent of the procedure's mean cost. See Guide B04-03.
Separately payable drugs and biologicals	Generally average sales price plus 6 percent, updated quarterly.
Pass-through devices	Separately payable, with the device offset deducted so the device is not paid twice.

Category	Methodology
Brachytherapy sources and corneal tissue acquisition	Distinct methodologies apply.

Why rates move

• The annual update factor, which for CY 2026 was the hospital market basket increase reduced by the productivity adjustment.

• Recalibration of the underlying OPPS relative payment weights, which moves ASC weights for reasons unrelated to ASC costs.
• Budget neutrality adjustments applied within the ASC system for wage index updates, outlier spending, and pass-through payment projections.
• The annual wage index update and any applicable caps on wage index decreases.
• Changes in the MPFS non-facility practice expense amount, which can flip an office-based procedure between methodologies.

• ASCQR compliance status, which determines which conversion factor applies to every case for the year.
• Reassignment of a code's payment indicator or device-intensive designation.

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08

Documentation Supporting the Facility Claim

Guides B04-02 and B04-05 address the medical record comprehensively. What follows is the documentation specifically required to support the facility claim.

• Operative report supporting every code reported, with site, level, laterality, approach, and units
• Findings distinct from technique, supporting the discharge diagnosis and any diagnostic versus therapeutic distinction
• Implant and device documentation supporting any device HCPCS reported, or supporting that no device was furnished in a device-intensive procedure
• Documentation supporting a device furnished at no cost or with credit, and the amount of the credit
• For terminated procedures, the operative report identifying the point of termination and the clinical reason, retained and available on request
• Anesthesia record supporting the anesthesia service billed by the anesthesia provider and corroborating the facility record
• Diagnosis documentation supporting the diagnosis reported and consistent with the payer's covered diagnosis list
• Drug and biological administration documentation supporting units of separately payable items
• Authorization detail, and where applicable the unique tracking number under the ASC prior authorization demonstration
• Advance Beneficiary Notice where issued, with the modifier pathway consistent with the notice

Terminated procedure documentation

Terminated procedures carry a specific documentation obligation. The ASC must retain a copy of the operative report for the terminated procedure and make it available to Medicare on request. The report should identify the procedure that was to be performed. Where a paper claim is submitted, contractors have instructed that a copy of the operative report be included; for electronic claims, the standard practice is to indicate that documentation is available on request in the electronic equivalent of the narrative field. Facilities should confirm current submission instructions with their MAC.

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09

Covered Ancillary Services

Covered ancillary services are the defined categories eligible for separate payment when provided integral to a covered surgical procedure. They are identified in the annual Addendum BB with their payment indicators. Everything not appearing there is packaged.

Category	Notes
Brachytherapy sources	Paid under a distinct methodology.
Certain implantable items with OPPS pass-through status	Separately payable while pass-through status is active. Verify the category is active for the date of service.
Certain items and services contractor-priced	Priced by the MAC where no national rate applies.
Certain drugs and biologicals separately paid	Generally average sales price plus 6 percent, updated quarterly.
Certain radiology services	Separately payable when integral to a covered surgical procedure, subject to the lesser-of methodology described in Section 7. Radiology not integral to a covered surgical procedure is outside the scope of ASC services.
Corneal tissue acquisition	Paid based on acquisition cost or invoice, under its own rules.
Non-opioid pain management products	Separately payable in the ASC setting under the temporary policy continuing through December 31, 2027, subject to the eligibility conditions.

The operational point is narrow and important: a service being clinically ancillary does not make it a covered ancillary service. The term is a defined payment category, and the answer is found in Addendum BB and the payment indicator, not in clinical reasoning about what supported the procedure.

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10

Packaging: What Is Included in the Procedure Payment

Packaging is the default rule and the most consequential concept in ASC billing. Payment for a covered surgical procedure includes the facility services furnished in connection with it.

Packaged category	Examples
Nursing, technician, and related services	Operating room and recovery nursing, scrub and circulating personnel, and related staff.
Use of the facility	Operating and procedure rooms, recovery areas, and the physical plant.
Drugs, biologicals, and supplies not separately payable	Anesthetic agents furnished by the facility, irrigation, local anesthetics, and routine medications administered in connection with the procedure.
Surgical dressings, splints, casts, and appliances	Where used in connection with the covered surgical procedure.
Equipment and its use	Including capital equipment, imaging equipment used intraoperatively where not separately payable, and instrumentation.
Implantable devices, except where separately payable	Packaged, with the device-intensive methodology accounting for the device portion in the procedure rate where applicable.
Administrative, recordkeeping, and housekeeping services	Including the facility's administrative functions.
Materials for anesthesia	Where furnished by the facility.

Packaged category	Examples
Blood, blood plasma, and platelets, subject to applicable rules	Consult current guidance for the treatment of blood products.

GoHealthcare Prior Authorization Insight: build the charge master from the addenda

The most reliable way to prevent both missed revenue and packaging violations is to build and maintain the charge master directly from the annual addenda rather than from clinical or cost logic.

For every code the facility reports, the addenda answer three questions: is it a covered surgical procedure, is it a covered ancillary service, and what is its payment indicator. Those three answers determine whether it may be reported separately. Cost is not an input to that determination, and neither is how integral the item felt clinically.

Facilities that maintain the charge master this way and refresh it at each annual and quarterly update find both categories of error at once: items being billed that should be packaged, and separately payable items that were never set up to bill. In our experience the second is more common than facilities expect.

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11

Payment Indicators and the Annual Addenda

The payment indicator is the single most useful field in ASC billing. It determines whether a code is paid, how it is paid, and what other reporting obligations attach. Payment indicator definitions are published in the annual Addendum DD1, and comment indicators in Addendum DD2.

Addend um	Contents	Operational use
AA	Covered surgical procedures, with payment indicators, relative payment weights, and payment rates.	The primary reference. Determines whether a procedure is payable in the ASC and at what rate.
BB	Covered ancillary services, with payment indicators and rates.	Determines what may be separately reported alongside a covered surgical procedure.
DD1	Payment indicator definitions.	The key to reading AA and BB. Should be read at each annual update; indicator definitions and assignments change.
DD2	Comment indicator definitions.	Identifies codes subject to comment or interim status.
EE	Surgical procedures excluded from payment in ASCs.	The scheduling edit source. A Medicare case scheduled for a code on this list will not be paid.
FF	Device offset percentages, device portions, and applicable OPPS payment rates for covered surgical procedures.	Device-intensive workflow and implant margin modeling. See Guide B04-03.

Payment indicators encountered most often in musculoskeletal practice

Indicator	Meaning	Workflow consequence
J8	Device-intensive procedure; paid at an adjusted rate.	A device HCPCS code must accompany the procedure, or C1890 where no device was furnished. Omitting both triggers the device edit.
J7	OPPS pass-through device paid separately when provided integral to a covered surgical procedure.	Report separately; verify the pass-through category is active for the date of service and that the procedure pairing is permitted.

Indicator	Meaning	Workflow consequence
Packaged indicators	Identify services packaged into the payment for a covered surgical procedure.	Do not report separately. This is where most packaging violations originate.
Office-based indicators	Identify procedures subject to the lesser-of methodology.	Expect the rate to move between methodologies across years; model accordingly.
Separately payable drug and biological indicators	Identify items paid separately, generally at average sales price plus 6 percent.	Report with the correct HCPCS code and units. Rates update quarterly.
Non-payable indicators	Identify codes not paid under the ASC payment system.	Scheduling and charge master edits should prevent these from reaching a claim.

Facilities should read Addendum DD1 in full at each annual update rather than relying on institutional memory of what an indicator means. Indicator definitions and code assignments both change, and a code carrying one indicator last year may carry another this year.

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12

Payment Adjustments and How They Interact

Multiple procedures

Where more than one covered surgical procedure is performed in the same operative session, the highest-valued procedure is paid at 100 percent of the applicable ASC rate and additional procedures are paid at 50 percent, for procedures subject to the reduction. Not every procedure is subject to it; the applicable indicator governs.

Terminated and discontinued procedures

Modifier	When applied	Payment	Multiple procedure reduction
73	Procedure terminated due to onset of medical complications after the patient was prepared and taken to the operating room, but before anesthesia was induced or the procedure initiated.	50 percent of the ASC rate.	Not subject to the reduction.
74	Procedure terminated due to onset of medical complications after anesthesia was induced or the procedure initiated.	Full payment.	May be subject to the reduction if the procedure is otherwise subject to it.
52	Discontinuance of a procedure not requiring anesthesia, including radiology and other such procedures.	50 percent reduction.	Not subject to the reduction.

The logic is resource consumption. A procedure terminated before anesthesia expended some supplies and resources, but not to the extent of a case with anesthesia fully induced; a procedure terminated after anesthesia consumed substantially the full resource set. The documentation must therefore establish the point of termination, because that point determines both the modifier and the payment.

Other adjustments

• Device-intensive methodology - the procedure is paid at an adjusted rate reflecting the device portion. See Guide B04-03.

• Device credit - modifiers FB and FC reduce payment where a device was furnished at no cost or with credit. For no-cost or full credit, payment is reduced by the device portion; for partial credit, by one-half the device offset amount.
• Bilateral procedures - subject to the multiple procedure reduction where the procedure is otherwise subject to it. Facilities should confirm current bilateral payment treatment against Chapter 14 and MAC guidance rather than assuming parity with physician fee schedule conventions.

• Wage adjustment - applied to the 50 percent labor-related portion.
• ASCQR non-compliance - the lower conversion factor applies to every case for the year.

Adjustments interact, and the interaction is where variance hides

A single device-intensive multi-level case with an implant furnished at partial credit, performed in a wage index area below 1.0, at a facility that failed ASCQR reporting, is subject to five adjustments simultaneously. Facilities routinely reconcile one at a time and conclude the payment is wrong.

Before disputing an ASC payment, reconstruct it in order: conversion factor, relative weight, wage adjustment on the labor portion, then each applicable adjustment in sequence. Most variances resolve at that step. The ones that do not are worth pursuing, and are far more credible when presented with the reconstruction attached.

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13

The Claim Construction Workflow

Stage	Actions	Failure if skipped
1. Code from the record	Assign procedure codes from the operative report, never from the schedule, the preference card, or the authorization.	A claim that does not match the service furnished, which is a compliance exposure rather than a shortcut.
2. Verify Covered Procedures List status	Confirm each code appears on the current ASC Covered Procedures List and is not on Addendum EE.	A Medicare case with no facility payment available.
3. Read the payment indicator	For every code, confirm the payment indicator and what it requires.	Packaging violations, device edit failures, and separately payable items never billed.
4. Device reconciliation	For J8 procedures, confirm a device HCPCS code or C1890; verify the code pair relationship.	Mechanical device edit denial.
5. Separately payable items	Report covered ancillary services, separately payable drugs and biologicals, and pass-through devices with correct codes and units.	Revenue never billed, which is invisible in denial data.
6. Packaging check	Confirm no packaged item is being reported separately.	Overpayment exposure with identification and return obligations.
7. Modifiers	Apply laterality, termination, device credit, and beneficiary notice modifiers consistent with the documentation.	Payment adjustments misapplied in either direction.
8. Place of service and identifiers	POS 24; correct billing entity, tax identification number, and national provider identifier.	Claims repriced under the wrong system or denied outright.
9. Authorization linkage	Report the authorization number and, where the ASC prior authorization demonstration applies, the unique tracking number in the correct field.	Claim stopped for prepayment review despite a valid authorization.
10. Diagnosis	Report diagnoses at required specificity, consistent with the authorization and the covered diagnosis list.	Medical necessity denial on a payable service.
11. Pre-submission review	Reconcile the claim against the operative report and the addenda before submission.	Correctable errors submitted and then appealed.
12. Remittance reconciliation	Reconstruct expected payment and reconcile against the remittance, adjustment by adjustment.	Variance absorbed rather than understood.

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14

Common Billing Errors and Denials

Error	Category	Root cause	Prevention
Packaged item billed separately	Compliance	Charge master built on cost rather than on the addenda.	Charge master maintained from Addendum AA, BB, and DD1, refreshed each update.
Separately payable item never billed	Revenue	Item not set up in the charge master; invisible because it produces no denial.	Annual addenda reconciliation identifying payable items not configured.
Device-dependent procedure without a device code or C1890	Mechanical	Device edit not checked pre-submission.	Device reconciliation step. See Guide B04-03.
Device code outside its permitted pairing	Mechanical	Code pair file not verified.	Verification against the current ASC code pair file.
Wrong place of service	Mechanical	POS 22 or another value on an ASC facility claim.	POS 24 enforced at claim assembly; claims with the wrong POS may be repriced under a different payment system or denied.
Procedure on Addendum EE	Mechanical	Scheduling edit absent.	Scheduling edit against the current addenda, refreshed each January.
Facility and professional claims reporting different codes	Audit exposure	No reconciliation between the two.	Periodic paired-claim audit, which most facilities never perform.
Terminated procedure modifier misapplied	Payment	Point of termination not documented, so the modifier is inferred.	Operative documentation establishing the point of termination.
Device credit unreported	Compliance	Materials management and billing not connected.	Defined routing protocol. See Guide B04-03.
Units not supporting multi-level procedures	Payment	Levels performed not reported as units.	Units reconciled against the operative report.
Unlisted code billed to Medicare as an ASC facility service	Mechanical	Unlisted codes are among the procedures excluded from ASC payment.	Charge master and scheduling edit.
ASCQR non-compliance	Revenue	Quality reporting treated as a quality department matter.	ASCQR compliance tracked on the revenue cycle dashboard; it moves the conversion factor for every case.
Quarterly update not applied	Payment	Annual-only review of addenda and rates.	Quarterly update review as a scheduled operational event.

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15

Overpayments, Appeals, and Reopenings

Classify before responding

Event	Nature	Response
Front-end rejection	The claim never entered adjudication.	Correct and resubmit. Not an appealable determination.
Mechanical edit denial	Adjudicated but denied on an edit.	Correct and resubmit, or request a reopening for a minor error, depending on the circumstances and the contractor's process.

Event	Nature	Response
Medical necessity denial	An initial determination.	The standard Medicare appeals sequence: redetermination, reconsideration by a Qualified Independent Contractor, Administrative Law Judge hearing, Medicare Appeals Council, judicial review.
Prepayment review determination	Follows an Additional Documentation Request; the resulting claim determination is appealable.	Respond fully to the ADR within the response window; appeal the determination if adverse.
Non-affirmation under a prior authorization program	Not an initial determination.	Not appealable. Resubmit with the deficiency corrected. See Guide B04-01.
Underpayment or misapplied adjustment	A payment error rather than a coverage dispute.	Reconstruct the expected payment, then pursue reopening or the contractor's correction process with the reconstruction attached.
Identified overpayment	A compliance obligation, not a discretionary matter.	Overpayments carry identification and return obligations. Route through the compliance program with counsel involvement where the amount or pattern warrants.

Self-identified overpayments

Where a facility identifies that it has been paid for something it should not have been - a packaged item billed separately, an unreported device credit, a device code reported where no device was furnished - the discovery creates an obligation rather than an option. Federal overpayment rules impose identification and return requirements with associated timeframes.

The error that pays is more dangerous than the error that denies

A billing error that produces a denial surfaces itself. The facility sees it, works it, and usually fixes the cause. An error that produces payment surfaces nothing. It accumulates quietly, at scale, until an audit finds it.

This asymmetry means denial data alone is an inadequate quality control for ASC billing. A facility that measures only what denies is blind to the more serious category. Periodic proactive audit - against the addenda, against the operative reports, against the paired professional claims - is the only mechanism that finds errors running in the facility's favor.

When one is found, the correct response is to route it through the compliance program, quantify the exposure, and address the return obligation. The instinct to quietly correct the process going forward and leave the past alone is understandable and is not adequate.

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Coding and Billing Overview

• Code from the operative report. Where the report does not support a code, query the physician; where the physician cannot support it, the code is not billed.
• The ASC and the operating physician should report the same procedure code for the same service.
• Read the payment indicator for every code before deciding whether and how to report it.
• Do not report separately any item packaged into the covered surgical procedure allowance.
• Report separately payable drugs, biologicals, covered ancillary services, and pass-through devices with correct codes and units.
• For device-intensive procedures, report a device HCPCS code or C1890, verified against the code pair file.

• Apply modifiers consistent with the documentation, including termination modifiers reflecting the documented point of termination.

• Report place of service 24 and the correct billing entity identifiers.
• Report the authorization number and, where applicable, the unique tracking number in the correct claim field.
• Reconcile the claim against the operative report and the current addenda before submission.

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Procedure Code Reporting

Consideration	Requirement
Covered Procedures List status	Confirm the code is on the current list and not on Addendum EE for the applicable year.
Payment indicator	Confirm the indicator and its current definition in Addendum DD1.
Units and levels	Where a procedure is performed at multiple levels or sites, report the appropriate units. Units must be supported by the operative report.
Add-on codes	Report where applicable and supported. Authorization for a base code does not authorize add-on codes; see Guide B04-01.
Bilateral procedures	Report consistent with current guidance and the payer's convention, with laterality supported by the operative report and consistent with the consent and authorization.
Multiple procedures	Report each procedure performed; the multiple procedure reduction is applied by the contractor, not by the facility reducing its own charges.
Unlisted codes	Among the surgical procedures excluded from Medicare payment in the ASC. Do not report as an ASC facility service to Medicare.
Category III codes	Verify coverage posture and ASC payability before scheduling. See Guide B04-04.
Annual code changes	The CPT® update and the ASC addenda both take effect January 1. Authorizations obtained in the prior year for dates of service in the new year must be validated against the new code set.

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Drugs, Biologicals, Devices, and Supplies

Category	Reporting
Separately payable drugs and biologicals	Report with the correct HCPCS Level II code and units. Generally paid at average sales price plus 6 percent, with rates updated quarterly. Units are a frequent error source and must reflect the code descriptor's unit of measure.
Packaged drugs and biologicals	Not separately reportable. Includes anesthetic agents and routine medications furnished by the facility in connection with the procedure.
Non-opioid pain management products	Separately payable under the temporary policy continuing through December 31, 2027, subject to eligibility conditions including that the product not have pass-through status and not already be separately payable. The qualifying product list is maintained by CMS and changes; verify currently.
Device HCPCS codes	Required with device-intensive procedures; C1889 where no specific code applies; C1890 where no device was furnished. See Guide B04-03.
Pass-through devices	Separately payable while the category is active. Verify status for the date of service.
Implants packaged into the procedure	Not separately reportable. The device-intensive methodology accounts for the device portion in the procedure rate.
Supplies	Generally packaged. Separate reporting requires an affirmative basis in the addenda.
Radiopharmaceuticals and contrast	Treatment depends on the item and the applicable policy; verify against current addenda.

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Diagnosis Reporting

Issue	Requirement
Specificity	Billable to the required character specificity, with correct laterality and anatomic region.
Covered diagnosis lists	Where an LCD or Local Coverage Article enumerates covered diagnoses, the reported diagnosis must appear on it. A clinically accurate diagnosis outside the list will deny.
Consistency with authorization	The diagnosis on the claim should be consistent with the diagnosis on which authorization was obtained.
Consistency with the operative report	Post-operative and discharge diagnoses reflecting operative findings, not the pre-operative indication.
Secondary and complication codes	Reported where they establish severity, chronicity, prior surgical status, or complication, and where the policy requires them.
Region and laterality concordance	The diagnosis, the procedure, the imaging, and the implant documentation must describe the same level and side.

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ASC Modifiers

Modifier	Application and payment effect
73	Discontinued procedure prior to anesthesia administration or procedure initiation. 50 percent payment. Not subject to the multiple procedure reduction.
74	Discontinued procedure after anesthesia administration or procedure initiation. Full payment. May be subject to the multiple procedure reduction if the procedure otherwise is.
52	Discontinued procedure not requiring anesthesia, including radiology and similar procedures. 50 percent reduction. Not subject to the multiple procedure reduction.
FB	Device furnished without cost to the provider, or full credit received for a replaced device. Payment reduced by the device portion.
FC	Partial credit of 50 percent or more received for a replaced device. Payment reduced by one-half the device offset amount.
SG	ASC facility service. No longer required on Medicare ASC facility claims. Some commercial payers continue to require it; record the requirement in the payer matrix.
GA	Waiver of liability statement on file, where an Advance Beneficiary Notice was issued because payment is expected to be denied as not reasonable and necessary.
GX	Notice of liability issued voluntarily, where denial is expected under a statutory exclusion.
GY	Item or service statutorily excluded or not a Medicare benefit.
GZ	Item or service expected to be denied as not reasonable and necessary where no notice was issued. Liability cannot be transferred to the beneficiary.
50, RT, LT	Laterality and bilateral reporting, supported by the operative report and consistent with the consent and authorization.
59 and X-series	Distinct procedural service, where documentation establishes the distinct nature of the service.

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ASC Billing Checklist

Annual and quarterly

• Addendum AA reconciled against the charge master for covered surgical procedures and rates
• Addendum BB reconciled for covered ancillary services, identifying payable items not configured
• Addendum DD1 payment indicator definitions read in full, not assumed
• Addendum EE reconciled against scheduling edits
• Addendum FF reviewed for device-intensive designations and device portions
• ASC code pair file refreshed
• Conversion factor updated and ASCQR compliance status confirmed
• Wage index update applied
• CPT® and HCPCS annual changes mapped to the charge master
• Quarterly update articles reviewed and applied
• Prior-year authorizations for current-year dates of service validated against the new code set

Per claim

• Codes assigned from the operative report
• Covered Procedures List status confirmed; not on Addendum EE
• Payment indicator read for every code
• Device HCPCS code or C1890 present for device-intensive procedures, code pair verified
• Separately payable drugs, biologicals, and ancillary services reported with correct units
• No packaged item reported separately
• Modifiers consistent with documentation, including termination point where applicable
• Units supported by the operative report for multi-level procedures
• Place of service 24 and correct billing identifiers
• Authorization number and, where applicable, unique tracking number in the correct field
• Diagnosis at required specificity and consistent with authorization and covered diagnosis list
• Claim reconciled against the operative report before submission

Post-payment

• Expected payment reconstructed and reconciled against the remittance
• Adjustments verified in sequence rather than in aggregate
• Beneficiary liability collected against the remittance rather than an estimate
• Variances categorized rather than absorbed
• Periodic proactive audit against the addenda, the operative reports, and the paired professional claims
• Any identified overpayment routed through the compliance program

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22

ASC and Hospital Outpatient Payment Comparison

Dimension	ASC payment system	Hospital OPPS
Claim format	Professional - CMS-1500 or 837P	Institutional
Place of service / bill type	POS 24	Institutional bill type
Unit of payment	Covered surgical procedure	Ambulatory Payment Classification
CY 2026 conversion factor	$56.322 meeting ASCQR; $55.224 not meeting	$91.415; $90.967 for providers subject to 340B recoupment
Labor-related portion for wage adjustment	50 percent	60 percent
Quality program	ASCQR; 2.0 percentage point reduction	Hospital OQR; 2.0 percentage point reduction
Device credit mechanism	Modifiers FB and FC	Value code FD with condition codes; FB and FC discontinued for hospitals January 1, 2014
No device in a device-intensive procedure	C1890	Modifier CG
Covered procedure constraint	Limited to the ASC Covered Procedures List	Broader; constrained during the Inpatient Only list transition
Observation services	Not available	Available
Comprehensive packaging constructs	Packaging applies; no comprehensive APC construct	Comprehensive APCs and other packaging constructs apply

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23

GoHealthcare Clinical Insights

The addenda are the operating manual

Addendum AA, BB, DD1, EE, and FF answer nearly every ASC billing question that arises in practice. Facilities that build the charge master, the scheduling edits, and the claim rules directly from them - and refresh at each annual and quarterly update - eliminate most of the error categories in Section 14 structurally rather than through vigilance.

Audit for errors that pay, not only errors that deny

Denial data is a biased sample. It contains only the errors that failed. Periodic proactive audit against the addenda and the operative reports is the only way to find the more serious category, and it is the audit almost no facility performs until something forces it.

Reconstruct before disputing

ASC payment involves several adjustments that interact. Before treating a payment as wrong, reconstruct it: conversion factor, relative weight, wage adjustment on the labor portion, then each adjustment in sequence. Most variances resolve there, and the ones that do not are far more persuasive when presented with the reconstruction attached.

Reconcile the paired claims

The ASC and the operating physician bill the same case. Periodic comparison of paired facility and professional claims finds code divergence, laterality discrepancies, and unit mismatches that neither party detects alone. Where the entities are separately owned this requires a deliberate arrangement, and it is worth making.

Treat ASCQR as a revenue control

ASCQR non-compliance moves the conversion factor for every case for the year. It belongs on the revenue cycle dashboard alongside denial rate and days in accounts receivable, reported to the same leadership, on the same cadence.

Quarterly, not annual

Rates, payment indicators, pass-through categories, code pair relationships, and separately payable drug rates all change quarterly. A January-only review leaves three quarters of drift unaddressed, and device-heavy musculoskeletal case mix is the most sensitive to it.

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GoHealthcare Leadership Perspective

Billing accuracy is a compliance function, not only a revenue function

The ASC payment system's packaging default means the most consequential billing errors run in the facility's favor and are invisible in denial data. An organization that measures billing quality by denial rate alone is measuring only the half of the distribution that costs it money, and ignoring the half that creates overpayment exposure with identification and return obligations.

Rising acuity changes the error profile

The CY 2026 expansion of the Covered Procedures List and the Inpatient Only list phase-out are moving device-intensive, multi-level, higher-value cases into the ASC. Those cases carry more codes, more units, more devices, more adjustments, and more interaction between adjustments. The same error rate applied to higher-value claims produces materially larger exposure in both directions.

Rate movement is not performance

ASC rates move for reasons unrelated to a facility's operations: OPPS weight recalibration, budget neutrality adjustments, wage index updates, and methodology flips on office-based procedures. Leadership reviewing revenue per case without decomposing rate movement from volume, mix, and collection performance will draw wrong conclusions about the business.

ASCQR is a board-level line item

A 2.0 percentage point reduction applied to every case for a year is a material revenue event produced by a reporting failure. It should have named ownership, a tracked deadline, and governing body visibility, and it should not sit exclusively within a quality department that does not see the revenue consequence.

What leadership should require

• A charge master maintained directly from the annual addenda, with a named owner and a documented refresh at each annual and quarterly update.
• Proactive billing audit designed to find errors that pay, not only errors that deny, on a defined cycle.
• A defined process routing any identified overpayment through the compliance program.
• Paired facility and professional claim reconciliation on a periodic basis.
• Payment reconstruction capability, so variance disputes are grounded rather than asserted.
• ASCQR compliance tracked on the revenue cycle dashboard with governing body visibility.
• Revenue analysis that decomposes rate movement from volume, mix, and collections.
• Quarterly, not annual, review of addenda, payment indicators, and pass-through status.

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GoHealthcare Case Study

The following is an original composite educational scenario. It does not describe any actual patient, clinician, facility, or organization.

Scenario

A musculoskeletal ASC engaged an external reviewer after two years of flat net revenue per case despite growing volume and a favorable payer mix. Leadership's working hypothesis was underpayment. The review examined a sample of Medicare facility claims against the operative reports and the applicable annual addenda.

Findings

• Three supply items had been billed separately on every applicable case for over two years. All three were packaged under the applicable payment indicators. The claims had paid. The accumulated amount was material and constituted an overpayment.
• Two separately payable covered ancillary items had never been configured in the charge master and had never been billed. This produced no denials and had therefore never surfaced.
• Several device-intensive procedures had been billed without a device HCPCS code and without C1890. These denied on the device edit and had been worked as clinical appeals, which failed.
• In neurostimulator revision cases where no new generator was furnished, a generator device code had been reported. Some of these had paid, creating a second overpayment category.
• The charge master had last been reconciled to the addenda three years earlier. Quarterly updates were not reviewed at all.
• Multi-level spine cases were being billed with a single unit rather than units reflecting levels performed, producing systematic underpayment.
• The facility had missed an ASCQR reporting deadline in one year and had been paid at the lower conversion factor for that entire year without anyone in revenue cycle being aware.
• Payment variances had been categorized as underpayment without reconstruction. On reconstruction, most were correct applications of the multiple procedure reduction and the wage adjustment.

Analysis

The hypothesis was wrong in both directions simultaneously. The facility was being underpaid on units and unbilled ancillary services, and overpaid on packaged items and incorrect device reporting. Net revenue per case was flat because the two roughly offset, which is precisely why neither had been detected. The single root cause was a charge master disconnected from the addenda and never refreshed.

The ASCQR finding was the largest single-year revenue item and had been invisible because quality reporting and revenue cycle did not report to the same leadership or appear on the same dashboard.

Resolution

• The charge master was rebuilt directly from the current Addendum AA, BB, and DD1, with every code mapped to its payment indicator and a documented basis for separate reporting where applicable.
• The two unbilled ancillary items were configured and began billing.
• A pre-submission device edit check was implemented confirming a device HCPCS code or C1890 on every device-intensive procedure, verified against the code pair file.
• Neurostimulator revision coding was corrected prospectively, and both overpayment categories were quantified and routed through the compliance program with counsel involvement to address the return obligation.

• Unit reporting for multi-level procedures was corrected and a reconciliation added against the operative report.
• ASCQR compliance was assigned a named owner with tracked deadlines and added to the revenue cycle dashboard reported to the governing body.
• A payment reconstruction template was built so variances are decomposed before being categorized.
• Annual and quarterly addenda review was scheduled as an operational event with an owner.

• A proactive audit cycle was established sampling claims against the addenda and the operative reports, explicitly designed to find errors running in the facility's favor.

Outcome

Net revenue per case improved once unit reporting and the unbilled ancillary services were corrected, and the device edit denial category was substantially eliminated. The overpayment return was material and unwelcome, and leadership's stated view afterward was that discovering it internally was considerably better than the alternative. The finding that generated the most discussion was the ASCQR year: a full year of every case paid at the lower conversion factor, caused by a missed deadline, invisible to everyone whose job it affected.

Lessons learned

• Flat net revenue per case can conceal offsetting errors in both directions. Aggregate metrics hide compensating failures.
• Denial data is a biased sample containing only the errors that failed. The errors that pay require proactive audit.
• A charge master disconnected from the addenda produces missed revenue and compliance exposure simultaneously, from the same root cause.
• Mechanical edit denials must be classified as mechanical. Appealing them clinically wastes the timeline and never succeeds.
• Units are a systematic error category in multi-level musculoskeletal work and are rarely audited.
• ASCQR compliance is a revenue control and belongs on the revenue dashboard.
• Variances should be reconstructed before being categorized. Most are correct.
• Quarterly updates matter, particularly for device-heavy case mix.

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GoHealthcare Best Practices

Domain	Practice
Charge master governance	Built and maintained directly from Addendum AA, BB, and DD1, with every code mapped to its payment indicator and a documented basis for separate reporting.
Update discipline	Annual and quarterly addenda review scheduled as operational events with a named owner, not performed reactively.
Scheduling edits	Built from the current Covered Procedures List and Addendum EE, refreshed each January.
Device edit control	Pre-submission verification that every device-intensive procedure carries a device HCPCS code or C1890, validated against the current code pair file.
Packaging audit	Periodic verification that no packaged item is being reported separately, run against the addenda rather than against intuition.
Unbilled revenue audit	Periodic identification of separately payable items not configured in the charge master, which produce no denials and are otherwise invisible.
Unit reconciliation	Units reconciled against the operative report for every multi-level procedure.
Paired claim reconciliation	Periodic comparison of facility and professional claims for the same case on code, laterality, and units.
Payment reconstruction	Expected payment reconstructed adjustment by adjustment before any variance is categorized or disputed.

Domain	Practice
Proactive audit	An audit cycle explicitly designed to find errors running in the facility's favor, in addition to denial work.
Overpayment process	A defined route from identification through quantification to return, with compliance and counsel involvement.
ASCQR ownership	Named owner, tracked deadlines, revenue cycle dashboard placement, and governing body visibility.

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Common Mistakes

• Billing packaged items separately. This is an overpayment exposure, not underpayment recovery, and the packaged determination is made by the addenda rather than by cost.
• Measuring billing quality by denial rate alone. Denial data contains only the errors that failed.
• Building the charge master from cost or clinical logic. Build it from Addendum AA, BB, and DD1.
• Never identifying separately payable items that were never configured. They produce no denials and are invisible without proactive audit.
• Reviewing addenda annually only. Rates, indicators, pass-through status, and code pairs change quarterly.
• Reporting a single unit for a multi-level procedure. A systematic and rarely audited underpayment.
• Appealing mechanical edit denials clinically. Correct and resubmit instead.
• Assuming the ASC is paid like the hospital outpatient department. Different claim format, different conversion factor, different labor share, different device credit mechanism, different no-device mechanism.
• Using hospital device credit mechanisms in the ASC. Value codes and condition codes do not exist on the professional claim format; ASCs use FB and FC.
• Reporting a device code where no device was furnished. C1890 is the correct reporting, and the incorrect version may pay, creating an overpayment.
• Treating ASCQR as a quality department matter. It moves the conversion factor for every case for the year.
• Categorizing variance as underpayment without reconstruction. Most variances are correct applications of adjustments that interact.
• Reporting a place of service other than 24 on an ASC facility claim. The claim may be repriced under a different payment system or denied.
• Billing unlisted codes to Medicare as ASC facility services. They are excluded from ASC payment.
• Correcting a discovered overpayment going forward and leaving the past alone. Identification creates a return obligation.

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Pearls and Pitfalls

Pearls

• Read the payment indicator first. It answers whether and how to report almost every code.
• Read Addendum DD1 in full each year rather than relying on memory of what an indicator means.
• Reconstruct expected payment before disputing it. Most variances resolve, and the rest become credible.
• Audit for errors that pay. It is the only way to find the category that matters most.
• Reconcile paired facility and professional claims periodically. Neither party sees the divergence alone.

• Treat the quarterly update articles as operational documents, not newsletters. Device-heavy case mix is quarter-sensitive.
• Put ASCQR on the revenue dashboard. It is a conversion factor event, not a quality metric.

Pitfalls

• Packaging is the default. Separate payment requires an affirmative basis in the addenda.
• The ASC wage adjustment applies to a 50 percent labor-related portion, which differs from the OPPS labor share; do not carry hospital assumptions across.

• Office-based procedures are paid at the lesser of the MPFS non-facility practice expense amount or the standard ASC rate, and which applies can change year to year.
• Modifier 73 pays 50 percent and is not subject to the multiple procedure reduction; modifier 74 pays in full and may be. The documented point of termination determines which applies.
• ASC rates move with OPPS weight recalibration, for reasons unrelated to ASC costs.
• The ASCQR conversion factor differential applies to every case for the entire year, not prospectively from the failure.
• An error that pays surfaces nothing and accumulates at scale.
• Unlisted codes are excluded from ASC payment, which affects both scheduling and charge master design.

• Beneficiary liability should be collected against the remittance, not an estimate, and balance billing above the approved amount is not permitted.

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Frequently Asked Questions

Q1. What claim format does an ASC use?

The professional claim format - the CMS-1500 or the 837 professional transaction - not the institutional format used by hospital outpatient departments. Place of service 24 identifies the ASC. This is the structural reason several hospital billing mechanisms are unavailable to ASCs.

Q2. What is the CY 2026 ASC conversion factor?

$56.322 for ASCs meeting Ambulatory Surgical Center Quality Reporting Program requirements and $55.224 for those that do not. The CY 2025 conversion factor was $54.895.

Q3. How was the CY 2026 update calculated?

A 2.6 percent update, based on a 3.3 percent hospital market basket increase reduced by a 0.7 percentage point productivity adjustment, with budget neutrality adjustments applied.

Q4. How is the ASC rate for a procedure calculated?

For most covered surgical procedures, the conversion factor multiplied by the procedure's ASC relative payment weight, then adjusted for area wages, then subject to any applicable payment adjustments.

Q5. How does the wage adjustment work?

The ASC wage index is applied to a 50 percent labor-related portion for covered surgical procedures and certain covered ancillary services. The remaining portion is not wage adjusted. Note this differs from the OPPS labor-related share.

Q6. Where do ASC relative payment weights come from?

They are generally derived from the OPPS relative payment weights for the same services and scaled within the ASC system. A practical consequence is that ASC rates move when OPPS weights are recalibrated, for reasons unrelated to ASC costs.

Q7. What is packaged into the ASC payment?

Facility services furnished in connection with the covered surgical procedure: nursing and technician services, use of the facility, drugs and supplies not separately payable, surgical dressings and appliances, equipment, administrative and recordkeeping services, materials for anesthesia, and implantable devices except where separately payable.

Q8. Can we bill separately for an expensive supply that is packaged?

No. ASCs must not report separate line items or separate charges for items packaged into the covered surgical procedure allowance. Where the packaged payment does not cover cost, the response is case selection, contracting, or supply chain - not a line item. Separate billing of packaged items is an overpayment exposure.

Q9. How do we know whether an item is packaged?

The payment indicator and the annual addenda. Addendum AA covers surgical procedures, Addendum BB covers ancillary services, and Addendum DD1 defines the payment indicators. Cost and clinical reasoning are not inputs to this determination.

Q10. What are covered ancillary services?

A defined set of categories eligible for separate payment when integral to a covered surgical procedure, identified in the annual Addendum BB. A service being clinically ancillary does not make it a covered ancillary service; the term is a payment category.

Q11. How are separately payable drugs paid?

Generally at average sales price plus 6 percent, with rates updated quarterly. Report with the correct HCPCS code and units, taking care that units reflect the code descriptor's unit of measure.

Q12. What is the multiple procedure reduction?

Where more than one covered surgical procedure is performed in the same operative session, the highest-valued procedure is paid at 100 percent of the applicable rate and additional procedures at 50 percent, for procedures subject to the reduction. The contractor applies it; the facility should not reduce its own charges.

Q13. How are terminated procedures paid?

Modifier 73, where the procedure was terminated after the patient was prepared and taken to the operating room but before anesthesia was induced or the procedure initiated: 50 percent of the rate, not subject to the multiple procedure reduction. Modifier 74, where terminated after anesthesia was induced or the procedure initiated: full payment, and may be subject to the multiple procedure reduction if the procedure otherwise is.

Q14. What about a discontinued procedure that did not require anesthesia?

Modifier 52 applies, with a 50 percent payment reduction, and the service is not subject to the multiple procedure reduction.

Q15. What documentation is required for a terminated procedure?

The ASC must retain a copy of the operative report and make it available to Medicare on request. The report should identify the procedure that was to be performed and establish the point of termination, since that point determines both the modifier and the payment. Confirm current claim submission instructions with your MAC.

Q16. How are office-based procedures paid?

Office-based surgical procedures added to the ASC list in CY 2008 or later, and covered ancillary radiology services, are paid at the lesser of the Medicare Physician Fee Schedule non-facility practice expense amount or the ASC rate under the standard methodology. Because the comparison is recalculated annually, the same code may be paid under different methodologies in different years.

Q17. What does the ASCQR reduction actually cost?

A 2.0 percentage point reduction to the annual update, which produces the lower conversion factor and applies to every case for the year. It is a revenue event caused by a reporting failure and belongs on the revenue cycle dashboard.

Q18. Which addenda should we be using?

Addendum AA for covered surgical procedures and rates; Addendum BB for covered ancillary services; Addendum DD1 and DD2 for payment and comment indicator definitions; Addendum EE for excluded procedures; Addendum FF for device offsets and device portions. All are updated annually and quarterly.

Q19. How often should we review the addenda?

Annually and quarterly. Rates, payment indicators, pass-through categories, code pair relationships, and separately payable drug rates all change quarterly, and device-heavy musculoskeletal case mix is the most sensitive to that drift.

Q20. Why did our device-intensive procedure deny?

Most commonly because no device HCPCS code and no C1890 was reported. This is a mechanical edit. Correct and resubmit; do not file a clinical appeal. See Guide B04-03.

Q21. Can we use value code FD for device credits?

No. Value codes and condition codes do not exist on the professional claim format. ASCs report device credits with modifiers FB and FC. Hospitals use value code FD with condition codes, and FB and FC were discontinued for hospital outpatient claims on January 1, 2014.

Q22. Should the ASC and the surgeon report the same procedure code?

Yes. Divergence between the facility and professional claims for the same service is an audit signal and a denial driver, and it is visible to the payer even when the facility does not see it. Periodic paired-claim reconciliation is worth establishing.

Q23. Are unlisted codes payable in an ASC?

No. Unlisted surgical procedure codes are among the procedures excluded from Medicare payment in the ASC. This should be enforced through scheduling and charge master edits.

Q24. What happens if we report the wrong place of service?

The claim may be denied or repriced under a payment system other than the ASC payment system. Place of service 24 identifies the freestanding ASC and must match the site where the case was performed and the site authorized.

Q25. How should we handle a payment that looks wrong?

Reconstruct it before disputing it: conversion factor, relative weight, wage adjustment on the labor portion, then each applicable adjustment in sequence. Most variances resolve at that step, and those that do not are considerably more persuasive with the reconstruction attached.

Q26. We found that we have been billing a packaged item separately for two years. What now?

That is an identified overpayment, and identification creates return obligations with associated timeframes. Route it through the compliance program, quantify the exposure, and involve counsel where the amount or pattern warrants. Correcting the process going forward without addressing the past is not adequate.

Q27. Why does denial data not tell us whether our billing is accurate?

Because it contains only the errors that failed. Errors that produce payment surface nothing and accumulate quietly. Proactive audit against the addenda and the operative reports is the only mechanism that finds them.

Q28. Does the beneficiary owe coinsurance for ASC services?

Yes. The Part B deductible and coinsurance apply, generally 20 percent of the Medicare-approved amount. Collect against the remittance rather than an estimate. ASCs accept assignment, and balance billing above the approved amount for covered services is not permitted.

Q29. What is the single highest-yield billing control?

A charge master built and maintained directly from the annual addenda, with every code mapped to its payment indicator, refreshed at each annual and quarterly update. It eliminates most error categories structurally rather than through vigilance, and it finds both missed revenue and packaging violations at the same time.

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Key Takeaways

• ASCs bill facility services on the professional claim format with place of service 24. Several hospital billing mechanisms are structurally unavailable as a result.

• The CY 2026 conversion factor is $56.322 for ASCs meeting ASCQR requirements and $55.224 for those that do not, reflecting a 2.6 percent update.
• For most covered surgical procedures the rate is the conversion factor multiplied by the relative payment weight, wage adjusted on a 50 percent labor-related portion.
• ASC relative payment weights derive from OPPS weights, so ASC rates move with OPPS recalibration for reasons unrelated to ASC costs.

• Packaging is the default. Separate payment requires an affirmative basis in the addenda, and separate billing of packaged items is an overpayment exposure rather than underpayment recovery.

• The payment indicator determines whether and how a code is paid and what other reporting obligations attach. Read it first.

• Office-based procedures and covered ancillary radiology are paid at the lesser of the MPFS non-facility practice expense amount or the standard ASC rate, and which applies can change annually.
• Multiple procedures: highest-valued at 100 percent, additional at 50 percent where subject to the reduction. Modifier 73 pays 50 percent and is exempt from the reduction; modifier 74 pays in full and may be subject to it.
• Adjustments interact. Reconstruct expected payment in sequence before treating a variance as an error.

• Denial data is a biased sample. Errors that pay require proactive audit, and they carry overpayment identification and return obligations.
• ASCQR non-compliance moves the conversion factor for every case for the year and belongs on the revenue cycle dashboard.
• Addenda change quarterly, not only annually, and device-heavy musculoskeletal case mix is the most sensitive to that drift.

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Future Outlook

Case mix migration reshapes the payment profile

The addition of 560 surgical procedures to the Covered Procedures List and the three-year Inpatient Only list phase-out will move higher-value, device-intensive, multi-level musculoskeletal cases into this payment system. Claims will carry more codes, more units, more devices, and more interacting adjustments. Billing accuracy becomes proportionally more consequential in both directions.

Site-neutral payment remains an open question

CMS included a request for information in the CY 2026 rulemaking cycle addressing payment for services performed in ASCs and physician offices relative to the hospital outpatient setting. Requests for information are not proposals, but they signal areas of policy interest. Organizations should read the actual text rather than summaries, and should monitor subsequent rulemaking cycles.

Device payment eligibility is tightening

As addressed in Guide B04-04, CMS proposed in the FY 2027 IPPS proposed rule to repeal the alternative pathway permitting Breakthrough Devices to qualify for outpatient device pass-through without demonstrating substantial clinical improvement, for applications received on or after October 1, 2026. If finalized, fewer new devices will carry separate payment and more will be absorbed into packaged procedure rates. That proposal was not final as of this guide's publication date and must be verified.

Non-opioid payment policy has a defined horizon

The temporary additional payments for qualifying non-opioid treatments for pain relief continue through December 31, 2027. Facilities incorporating those products into pathways should model the payment change at expiration rather than assuming continuation.

Quality reporting may gain payment consequence

ASCQR is currently a pay-for-reporting program. CMS has signaled early consideration of value-based approaches for ASCs. Any movement in that direction would convert quality data from a reporting obligation into a payment determinant, with substantially higher stakes for data accuracy and structured capture.

Structured data and electronic transactions

The CMS-0057-F interface requirements applicable to affected payers generally by January 1, 2027 address authorization rather than claims, but the direction is consistent: more structured data, more automated exchange, and less tolerance for narrative. Facilities with disciplined coding and structured clinical capture will adapt more readily.

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References

1. Centers for Medicare & Medicaid Services. Ambulatory Surgical Center Payment System program page, including annual and quarterly addenda AA, BB, DD1, DD2, EE, and FF, and the ASC code pair file. Website: https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc

2. Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual, Publication 100-04, Chapter 14 - Ambulatory Surgical Centers. Website: https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c14.pdf

3. Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual, Publication 100-04, Chapter 30 - Financial Liability Protections. Website: https://www.cms.gov/medicare/regulations-guidance/manuals/internet-only-manuals-ioms

4. Centers for Medicare & Medicaid Services. Calendar Year 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Final Rule (CMS-1834-FC), Fact Sheet. Website: https://www.cms.gov/newsroom/fact-sheets/calendar-ye ar-2026-hospital-outpatient-prospective-payment-system-opps-ambulatory-surgical-center

5. Federal Register. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems, CY 2026 final rule, 90 FR 54084, November 25, 2025. Website: https://www.federalregister.gov/documents/2025/11/25/2025-20907/m edicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment

6. Centers for Medicare & Medicaid Services. MLN Matters MM14359: Ambulatory Surgical Center Payment System January 2026 Update. Website: https://www.cms.gov/files/document/mm14359-ambulatory-surgical-center-payment-january-2026-update.pdf

7. Centers for Medicare & Medicaid Services. MLN Matters MM14445: Ambulatory Surgical Center Payment System April 2026 Update. Website: https://www.cms.gov/files/document/mm14445-ambulatory-surgical-center-payment-system-april-2026-update.pdf

8. Centers for Medicare & Medicaid Services. MLN Matters MM14246: Ambulatory Surgical Center Payment System October 2025 Update. Website: https://www.cms.gov/files/document/mm14246-ambulatory-surgical-center-payment-system-october-2025-update.pdf

9. Centers for Medicare & Medicaid Services. Medicare Payment Systems (MLN educational product), including the ASC payment system summary and the labor-related portion applied to the ASC wage index. Website: https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts/html/medicare-payment-systems.html

10. Electronic Code of Federal Regulations. 42 CFR Part 416, Subpart F - Coverage, Scope of ASC Services, and Prospective Payment System for ASC Services Furnished on or After January 1, 2008, including 416.163 (Scope), 416.164 (Scope of ASC services), 416.166 (Covered surgical procedures), 416.167 (Basis of payment), and 416.171 (Determination of payment rates). Website: https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-416/subpart-F

11. Electronic Code of Federal Regulations. 42 CFR 416.35 - Termination of agreement. Website: https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-416

12. Social Security Act, section 1833(i) - Ambulatory surgical center services. Website: https://www.ssa.gov/OP_Home/ssact/title18/1833.htm

13. Social Security Act, section 1833(t) - Prospective payment system for hospital outpatient department services, including section 1833(t)(6) transitional pass-through payments. Website: https://www.ssa.gov/OP_Home/ssact/title18/1833.htm

14. Centers for Medicare & Medicaid Services. Ambulatory Surgical Center Quality Reporting Program. Website: https://www.cms.gov/medicare/quality/initiatives/asc-quality-reporting

15. QualityNet. ASCQR Program measures and reporting requirements. Website: https://qualitynet.cms.gov/asc/ascqr/measures

16. Centers for Medicare & Medicaid Services. Hospital Outpatient Prospective Payment System program page. Website: https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient

17. Centers for Medicare & Medicaid Services. Medicare Physician Fee Schedule. Website: https://www.cms.gov/medicare/payment/fee-schedules/physician

18. Centers for Medicare & Medicaid Services. Transmittal R4204CP, establishing HCPCS C1890 and the device-intensive procedure policy effective January 1, 2019. Website: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2019Downloads/R4204CP.pdf

19. Electronic Code of Federal Regulations. 42 CFR 419.45 - Payment and copayment reduction for devices replaced without cost or when full or partial credit is received. Website:

https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-419/subpart-D/section-419.45

20. Centers for Medicare & Medicaid Services. Medicare Learning Network. Website: https://www.cms.gov/training-education/medicare-learning-network

21. U.S. Department of Health and Human Services, Office of Inspector General. Compliance guidance and audit reports, including reviews addressing medical device credit reporting. Website: https://oig.hhs.gov

22. Ambulatory Surgery Center Association. Payment and regulatory resources. Website: https://www.ascassociation.org

23. Medicare Payment Advisory Commission. Reports to the Congress addressing ambulatory surgical center services. Website: https://www.medpac.gov

24. American Medical Association. CPT® Current Procedural Terminology. Website: https://www.ama-assn.org/practice-management/cpt

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Reading Recommendations

• Medicare Claims Processing Manual Chapter 14 in full. It is the operational manual for ASC billing and is shorter than most people assume.

• The current-year Addendum DD1 payment indicator definitions, read completely rather than referenced selectively.
• Addendum AA and Addendum BB reconciled against the facility's own charge master, code by code.
• Addendum EE reconciled against the facility's scheduling edits.
• Addendum FF for device offsets, read alongside Guide B04-03 for the implant workflow.
• The quarterly MLN Matters ASC payment system update articles, treated as operational documents.
• 42 CFR Part 416 Subpart F, particularly the sections addressing scope of ASC services, basis of payment, and determination of payment rates.
• The CY 2026 OPPS/ASC final rule sections addressing ASC payment policies, the conversion factor, and additions to the covered surgical procedures and covered ancillary services lists.
• MedPAC reports addressing ambulatory surgical center services, for context on how the payment system is evaluated and where policy pressure originates.

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Related GoHealthcare Resources

Guide	Focus	Status
B04-01 - ASC Prior Authorization	Medicare prior authorization regimes, site-of-service review, and authorization linkage to the claim.	Published (v1.1)
B04-02 - ASC Documentation Requirements	Conditions for Coverage architecture and medical record standards.	Published
B04-03 - Implant Authorization	Device-intensive methodology, pass-through, device HCPCS reporting, C1890, and credit modifiers. The essential companion to Sections 11 and 12 of this guide.	Published
B04-04 - Medical Device Coverage	Coverage determinations and the 2026 emerging technology pathway realignment, including the proposed pass-through eligibility change.	Published
B04-05 - Same-Day Surgery Documentation	The perioperative record, including the documentation supporting codes, units, and termination modifiers.	Published
B04-06 - Observation versus Outpatient	Length of stay, the 2026 Covered Procedures List criteria restructuring, and setting decisions.	Published
B04-07 - Medicare ASC Billing	This guide.	Published
B04-08 - Commercial ASC Billing	Contract structures, carve-outs, implant reimbursement, and balance billing protections.	Planned

Guide	Focus	Status
B04-09 - Revenue Cycle for ASCs	End-to-end revenue cycle design, key performance indicators, denial management, and underpayment recovery. The performance analytics deliberately excluded from this guide.	Planned
B04-10 - Compliance and Accreditation	Compliance program design including overpayment obligations, survey readiness, and quality reporting.	Planned

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35

Recommended Downloads

• Charge Master Reconciliation Workbook - every reported code mapped to its Addendum AA or BB status, payment indicator, and documented basis for separate reporting.
• Payment Indicator Quick Reference - the indicators encountered most often in musculoskeletal practice with their workflow consequences.

• Payment Reconstruction Template - conversion factor, relative weight, wage adjustment on the labor portion, and each adjustment in sequence.
• Annual and Quarterly Update Checklist - the addenda, code pair file, conversion factor, wage index, and code set changes to be applied, with owner and completion date.
• Device Edit Pre-Submission Check - device HCPCS or C1890 present and code pair verified for every device-intensive procedure.
• Packaging Audit Tool - verification that no packaged item is being reported separately, run against the addenda.
• Unbilled Revenue Audit - identification of separately payable items not configured in the charge master.
• Unit Reconciliation Worksheet - units reported against levels documented in the operative report.
• Paired Claim Reconciliation Template - facility and professional claim comparison on code, laterality, and units.
• Terminated Procedure Documentation Form - point of termination, clinical reason, and modifier determination.
• Overpayment Identification and Response Protocol - route from discovery through quantification to return, with compliance and counsel involvement.

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36

Visual Recommendations

Visual	Purpose	Placement
Rate construction waterfall	Conversion factor through relative weight, wage adjustment on the labor portion, and each adjustment to final payment.	Ratesetting section; also the basis for the reconstruction template.
Payment indicator decision tree	From code to indicator to reporting decision, including the device edit branch.	Payment Indicators section.
Packaging boundary diagram	What is inside the procedure payment and what is separately payable, with the addenda as the source of truth.	Packaging section.
Adjustment interaction matrix	Multiple procedure, termination, device-intensive, device credit, and wage adjustment shown in application order.	Payment Adjustments section.
Terminated procedure decision card	Point of termination to modifier to payment effect to multiple procedure treatment.	Payment Adjustments section.
Claim construction workflow	Twelve stages from coding through remittance reconciliation with the failure mode at each.	Claim Construction section.
ASC versus OPPS comparison table	Claim format, conversion factor, labor share, device credit mechanism, and no-device mechanism side by side.	Comparison section.

Visual	Purpose	Placement
Error direction diagram	Errors that deny versus errors that pay, with the detection mechanism for each.	Overpayments and Appeals section.
Addenda map	AA, BB, DD1, DD2, EE, and FF with what each answers and when it updates.	Payment Indicators section.
Annual and quarterly calendar	Twelve-month operational calendar of code set, addenda, rate, and quality reporting events with owners.	Best Practices section.

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38

Educational Disclaimer

Educational Disclaimer, Limitations, and Terms of Use

This guide is provided for educational and operational reference purposes only. By reading, distributing, or relying on this document, you acknowledge and accept the terms set out in this section in their entirety. If you do not accept these terms, do not use this document.

1. Purpose and scope

This guide addresses the operational, documentation, coverage, medical necessity, prior authorization, utilization management, coding, and compliance considerations that surround the delivery of musculoskeletal specialty care. It is a practice operations resource. It is expressly not a clinical textbook, a procedural technique manual, a physician training guide, a specialty society practice guideline, a coding manual, a payer policy manual, or a legal treatise.

This guide does not provide, and must not be used as a source of, procedural or surgical technique, needle or instrument placement instruction, anesthesia technique, medication selection or dosing, imaging technique, device programming, or any other instruction bearing on the physical performance of a procedure on a patient.

2. No professional advice and no professional relationship

Nothing in this guide constitutes medical, nursing, legal, regulatory, compliance, accounting, tax, actuarial, coding, billing, reimbursement, or consulting advice. Reading or relying on this guide does not create a physician-patient relationship, a clinician-patient relationship, an attorney-client relationship, an accountant-client relationship, a consulting engagement, or any other professional, contractual, or fiduciary relationship with GoHealthcare Practice Solutions, with its officers, employees, or contractors, or with the author.

Readers should obtain advice from their own qualified clinical, legal, compliance, coding, and reimbursement professionals with respect to their specific facts, jurisdiction, payer contracts, and circumstances before acting on any information in this guide.

3. Independent clinical judgment governs all patient care

All decisions regarding patient evaluation, diagnosis, treatment selection, procedure selection, patient selection, anesthesia planning, site of service, and discharge are the exclusive responsibility of the treating licensed clinician exercising independent professional judgment for the individual patient. This guide does not, and cannot, account for any individual patient's clinical presentation, comorbidities, preferences, or circumstances. No content in this guide should be permitted to influence a clinical decision away from what the treating clinician judges to be in the patient's best interest.

4. Coverage, coding, and payment information is time-limited and may be superseded

National Coverage Determinations, Local Coverage Determinations, Local Coverage Articles, CMS manuals, transmittals, program instructions, demonstration and model parameters, commercial medical policies, utilization management vendor criteria, code sets, code descriptors, payment indicators, covered procedure lists, conversion factors, and quality reporting requirements all change frequently, are revised on differing cycles, may be applied differently by different contractors and jurisdictions, and may be amended, corrected, suspended, delayed, or withdrawn without notice.

All statements in this guide reflect publicly available authoritative sources as understood on the publication date stated in the Document History section. They may have been superseded by the time you read this. The reader is solely responsible for verifying every requirement against the primary source and the payer policy actually in effect on the applicable date of service. Where this guide and a primary source conflict, the primary source governs.

5. No guarantee of authorization, coverage, payment, or outcome

GoHealthcare Practice Solutions makes no representation, warranty, prediction, or guarantee that following any recommendation, checklist, template, workflow, or strategy described in this guide will result in prior authorization approval, affirmation, coverage, payment, reimbursement at any particular level, a successful appeal, avoidance of a peer-to-peer review, avoidance of audit or medical review, or any other outcome. Authorization is not a guarantee of payment. Payment is subject to eligibility, benefit design and limits, network status, coding accuracy, timely filing, medical necessity, contract terms, and all other applicable requirements.

6. Site-of-service and utilization content

This guide describes differences among care settings, including differences in coverage rules, prior authorization requirements, payment systems, and administrative burden. This descriptive content is provided so that operational teams can execute correctly in whichever setting the treating clinician selects.

It is not, and must not be construed as, guidance to select or steer a site of service, a procedure, a code, or a patient population for economic reasons, for the purpose of avoiding prior authorization or utilization review, or for any purpose other than the clinical appropriateness and safety of the individual patient. Site-of-service selection must be driven by clinical appropriateness, patient safety, and applicable regulatory and accreditation requirements. Patterns of setting, procedure, or coding selection that are not clinically grounded may implicate the Federal Anti-Kickback Statute, the physician self-referral law, the False Claims Act, the Civil Monetary Penalties Law, beneficiary inducement prohibitions, state corporate practice and fee-splitting laws, state insurance law, and payer contract terms. Readers should obtain legal counsel before adopting any practice that could be characterized as steering.

7. Compliance and program integrity remain the reader's responsibility

Nothing in this guide should be interpreted as encouraging, endorsing, or excusing the submission of any claim, code, modifier, diagnosis, or authorization request that is not fully supported by the contemporaneous medical record and by the service actually furnished. Documentation must reflect the care that was delivered. Coding must reflect the documentation. Any authorization request or claim submitted under a provider's identifier is that provider's representation, regardless of who prepared it and regardless of whether any template, tool, or automation was used in its preparation.

Each organization is solely responsible for its own compliance program, coding and billing accuracy, medical record integrity, licensure and accreditation obligations, privacy and security obligations, and adherence to all applicable federal, state, and local law and to all applicable payer contract terms.

8. Intellectual property and third-party content

• CPT® is a registered trademark of the American Medical Association. CPT® is copyright of the American Medical Association. All rights reserved. Any CPT® code references in this guide are provided for educational identification only and any descriptor language is paraphrased. This guide does not convey any license to use CPT® content. Users must obtain a license directly from the American Medical Association. Website: https://www.ama-assn.org
• HCPCS Level II codes and ICD-10-CM codes are maintained by the Centers for Medicare & Medicaid Services, the National Center for Health Statistics, and other responsible authorities. Code references are educational and are not a substitute for the official code sets and official coding guidelines.
• Commercial payer medical policies and utilization management vendor clinical criteria - including but not limited to those of eviCore, Carelon Medical Benefits Management, Cohere Health, Evolent, TurningPoint Healthcare Solutions, UnitedHealthcare, Aetna, Cigna Healthcare, Humana, Elevance Health, and Blue Cross Blue Shield licensees - are the proprietary property of their respective owners and may be subject to their own terms of use. This guide synthesizes and summarizes requirements at a general operational level and does not reproduce, republish, or substitute for those materials. Readers must consult the current policy or criteria document directly, under whatever license or terms of access apply to them.
• All other trademarks, service marks, product names, device names, and organization names referenced in this guide are the property of their respective owners and are used for identification purposes only.

9. No endorsement

References to any payer, health plan, utilization management vendor, device or implant manufacturer, accrediting organization, professional society, publication, product, service, or organization are for identification and educational purposes only. They do not constitute an endorsement, recommendation, certification, or warranty by GoHealthcare Practice Solutions, and they do not imply any affiliation, sponsorship, partnership, or relationship with, or approval by, any such entity.

10. Third-party websites and links

This guide includes website addresses for authoritative primary sources as a convenience. GoHealthcare Practice Solutions does not control those sites and is not responsible for their content, availability, accuracy, currency, or terms of use. Inclusion of an address does not constitute endorsement of the site or its operator. Addresses may change or cease to function after publication.

11. Case studies, examples, templates, and checklists

All case studies, scenarios, examples, and quantitative illustrations in this guide are original composite educational constructions. They do not describe, and are not derived from, any actual patient, clinician, facility, health plan, or organization. Any resemblance to an actual person or entity is unintended and coincidental. No protected health information is contained in this guide.

Any checklist, template, workflow, matrix, or framework offered in this guide is a starting point requiring adaptation to the reader's own setting, payer mix, contracts, state law, accreditation standards, and clinical program. It should be reviewed and approved by the reader's own clinical, compliance, and legal leadership before adoption.

12. Preparation, verification status, and known limitations

This guide was prepared using publicly available authoritative sources. It was prepared without live access to proprietary payer policy databases, licensed code set databases, claims adjudication systems, or subscription clinical criteria platforms. Notwithstanding the verification performed, the reader should assume the possibility of error, omission, ambiguity, or subsequent supersession, and should independently verify any point on which the reader intends to rely. The verification and review status of this specific guide is recorded in the Document History section and should be consulted before operational use.

13. No warranty

This guide is provided "as is" and "as available," without warranty of any kind, whether express, implied, or statutory, including without limitation any implied warranty of accuracy, completeness, currency, reliability, title, non-infringement, merchantability, or fitness for a particular purpose. GoHealthcare Practice Solutions does not warrant that the information in this guide is accurate, complete, current, or applicable to any particular circumstance.

14. Limitation of liability

To the fullest extent permitted by applicable law, neither GoHealthcare Practice Solutions nor its officers, directors, members, employees, contractors, agents, or the author shall be liable for any direct, indirect, incidental, consequential, special, exemplary, or punitive damages, or for any loss of revenue, profit, reimbursement, data, goodwill, or business opportunity, or for any claim denial, recoupment, penalty, sanction, audit finding, or regulatory action, arising out of or in connection with the use of, reliance on, or inability to use this guide, whether based in contract, tort, negligence, strict liability, or any other theory, and whether or not advised of the possibility of such damages.

15. Copyright and permitted use

© 2026 GoHealthcare Practice Solutions. All rights reserved. GoHealthcare MSK Specialty Procedure Library™ and the GoHealthcare Clinical Procedure Guide Standard™ are marks of GoHealthcare Practice Solutions. This guide may be read, printed, and shared internally within a healthcare organization for its own educational and operational purposes, provided it is reproduced in full, without alteration, and with all attribution and this disclaimer intact. It may not be resold, relabeled, incorporated into a commercial product or training program, or republished externally without prior written permission.

16. Corrections and feedback

GoHealthcare Practice Solutions welcomes correction. If you identify an error, an omission, or a superseded requirement in this guide, please contact us so that it can be evaluated and addressed in a subsequent version. Website: https://www.gohealthcarellc.com

In Short

Summary. Verify everything against the primary source and the payer policy in effect on the date of service. Let clinical judgment govern patient care and site of service. Document what was actually done. Obtain your own legal and compliance advice. This guide informs your process; it does not assume your risk.

GoHealthcare Practice Solutions is a national Musculoskeletal Specialty Management Services Organization supporting Pain Management, Orthopedic Surgery, Spine Surgery, Neurosurgery, Neuromodulation, and Ambulatory Surgery Centers. Website: https://www.gohealthcarellc.com

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Developed by

Pinky Maniri

MSc, BSc, CRCR, CSAPM, CSPPM, CSBI, CSPR, CSAF, Certified in Healthcare A.I. Governance

Founder and Chief Executive Officer, GoHealthcare Practice Solutions

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