Glossary · Reimbursement

ASC payment system

The ASC payment system is Medicare's prospective payment methodology for ambulatory surgical centers, where CMS assigns predetermined facility payment rates to covered procedures rather than reimbursing actual costs. Rates are updated annually through the OPPS/ASC final rule and are calculated as a percentage of the corresponding hospital outpatient rate.

Verified May 8, 2026 · 6 sources ↓

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Definition

Source · Editorial summary grounded in 6 cited references ↓

Under the ASC payment system, CMS groups covered procedures by clinical similarity and resource intensity, then sets a fixed facility payment rate for each group. Those rates are derived from Hospital Outpatient Prospective Payment System (OPPS) Ambulatory Payment Classification (APC) rates, with ASC payments calculated as a defined percentage of what a hospital outpatient department would receive for the same or a clinically comparable service. Crucially, only procedures appearing on the ASC Covered Procedures List (CPL, Addendum AA) are eligible for Medicare payment at all; anything not on that list is automatically non-covered in the ASC setting regardless of how precisely it is coded.

Payment encompasses the facility's overhead costs—nursing staff, standard supplies, equipment, and routine drugs—but excludes the surgeon's professional fee, which is billed separately under the Medicare Physician Fee Schedule using the Resource-Based Relative Value Scale. Implants and certain pass-through devices can trigger additional payment via specific HCPCS device codes paired with the appropriate CPT code. CMS publishes the complete payment data in the annual OPPS/ASC final rule, including Addendum AA (covered surgical procedures), Addendum BB (covered ancillary services), and Addendum EE (codes excluded from ASC payment).

For 2026, CMS finalized a 2.6% ASC payment rate increase and added 289 procedures to the CPL, including revision joint arthroplasty. CMS also extended its policy of aligning ASC annual payment updates with HOPD update rates, a change designed to narrow the longstanding reimbursement disparity between the two settings. Site-neutral payment proposals under consideration would further reduce that gap by lowering HOPD rates rather than raising ASC rates.

Why it matters

Performing a procedure at an ASC that is not on Medicare's CPL results in automatic denial—no appeal pathway cures a non-covered setting designation. Conversely, misidentifying a newly added procedure as inpatient-only leaves recoverable revenue on the table. The 2026 addition of 289 procedures to the CPL, combined with the 2.6% rate increase, creates direct reimbursement opportunity for orthopedic ASCs, but only if claims are built with the correct site-of-service indicator, matching authorization, and any required implant device HCPCS codes. A mismatch between the authorized setting and the site where care is actually delivered is one of the most common sources of delayed or reduced payment, per MGMA data.

Common mistakes

Where people most often go wrong with this concept.

Source · Editorial brief grounded in cited references ↓

Submitting a claim for a procedure removed from the inpatient-only list without first confirming it has been added to the ASC CPL—removal from IPO does not automatically grant ASC coverage.
Omitting the required HCPCS device code (e.g., C1737 for sacroiliac joint fusion implants) when billing complex orthopedic implant procedures, resulting in underpayment or denial of the device component.
Obtaining prior authorization for hospital outpatient delivery, then performing the case at the ASC—the site-of-service mismatch triggers denial even when the procedure itself is ASC-eligible.
Assuming ASC payment rates equal HOPD rates; ASC facility payments are a percentage of the OPPS APC rate, not the full HOPD amount, so financial projections based on HOPD contracts will be overstated.
Failing to update the internal CPL crosswalk annually; procedures added mid-year in the January update take effect January 1 and claims submitted before the crosswalk is updated may be coded to the wrong setting.

Related codes

Codes commonly involved when this concept appears in practice.

CPT

ICD-10

M17.11 M16.11

Modifiers

59 Distinct procedural service RT Right side LT Left side 51 Multiple procedures

Frequently asked questions

Source · Generated from the editorial pipeline, verified against 6 cited references ↓

01How is the ASC facility rate different from the surgeon's fee?

The ASC facility rate covers overhead costs—staff, supplies, equipment, and standard drugs—and is paid directly to the ASC under the ASC payment system. The surgeon's fee is a separate payment calculated under the Medicare Physician Fee Schedule and billed on a professional claim; the two are never combined on the same claim.

02Does removing a procedure from the inpatient-only list automatically make it ASC-covered?

No. Removal from the inpatient-only list means Medicare will pay for the procedure in outpatient hospital settings, but ASC coverage requires the procedure to also appear on the ASC Covered Procedures List (Addendum AA). Always verify CPL status separately.

03What happens to implant costs under the ASC payment system?

The base ASC payment packages most supply costs, but certain high-cost implants qualify for separate payment through pass-through or device-category HCPCS codes. The ASC must bill the applicable device HCPCS code alongside the surgical CPT code using the CMS-published code pair file; omitting this step leaves the implant cost unrecovered.

04How does the 2026 rate update affect orthopedic ASCs specifically?

CMS finalized a 2.6% ASC payment rate increase for 2026 and added 289 procedures to the CPL, including revision joint arthroplasty. ASCs that shift eligible orthopedic volume out of the hospital outpatient setting and into their facility can capture this rate improvement, provided quality reporting requirements are met.

05What is site-neutral payment, and how does it affect ASCs?

Site-neutral payment refers to CMS policies that reduce the reimbursement gap between hospital outpatient departments and lower-cost settings. Current proposals would lower HOPD rates rather than raise ASC rates, which could reshape case migration patterns and hospital-ASC competitive dynamics without directly increasing ASC payment amounts.

Sources & references

Editorial content was developed using the following public sources. Last verified May 8, 2026.

Mira AI Scribe

When Mira captures the operative site, planned implants, and procedure type in the ASC setting, it cross-references CMS's current ASC Covered Procedures List to confirm the procedure is payable in that setting before the claim is built. If the procedure is CPL-eligible and involves a reportable implant (e.g., a sacroiliac joint fusion device), Mira prompts the coder to pair the primary CPT code with the correct HCPCS device code (such as C1737 or C9610) per the January 2026 ASC code pair file requirements. Mira also flags place-of-service code 24 and checks that the authorization on file matches the ASC setting, not a hospital outpatient setting—a mismatch that is one of the leading causes of site-of-service denials. For newly added CPL procedures (289 added effective January 1, 2026, including revision joint arthroplasty), Mira surfaces a confirmation prompt so the care team can verify the clinical documentation explicitly supports outpatient acuity and anesthesia risk before the claim is finalized.

See Mira's approach

OPPS (Outpatient Prospective Payment System) is the Medicare payment framework under which hospital outpatient department services—including most orthopedic procedures performed in that setting—are reimbursed through pre-determined rates assigned to Ambulatory Payment Classifications (APCs).

APC (Ambulatory Payment Classification) Reimbursement

An Ambulatory Payment Classification (APC) is a Medicare prospective payment grouping used under the Outpatient Prospective Payment System (OPPS) that bundles outpatient hospital services with similar clinical intensity and resource cost into a single, fixed reimbursement rate.