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wiitalaRDo the rules that Recovery Audit Contractors (RACs) follow when they audit hospitals for the technical component (TC) of radiology services apply to ambulatory surgery centers (ASCs)?

That’s a question that one of our readers following my article entitled “RACs Find Errors on Professional Claims for Technical Component of Radiology

The answer is “it depends” on knowing the answers to a couple of questions.

Who Are You Billing?

When does an ASC bill Medicare Part B and when does it bill Medicare Part A? The answers aren’t hard to find when you look in the right place, which in this case is Trailblazer’s (one Medicare contractor) ASC billing manual. Trailblazer provides an informative rundown of payment information. (See References.)

Whether an ASC bills the Part B carrier (with the CMS-1500 form) or the Part A fiscal intermediary (with the CMS-1450/UB-04 form) depends upon the type of ASC. In general, for Medicare purposes, an ASC is a distinct entity that operates exclusively for the purpose of furnishing outpatient surgical services to patients. The ASC must enter into a “participating provider” agreement with CMS.

The surgical center may be independent, which means it isn’t part of a provider of services or any other facility. It also may be operated by a hospital, which means it is under that facility’s common ownership, licensure or control.

When hospital-operated, it has the option either of being covered under Medicare as an ASC or as a hospital-affiliated outpatient surgery department. The following guidelines apply to ASCs affiliated with hospitals. The ASC:

  • Must elect this affiliation and continue to be so covered unless the Centers for Medicare & Medicaid Services (CMS) determines there is good cause to do otherwise;
  • Be a separately identifiable entity (physically, administratively and financially independent and distinct from other hospital operations) with ASC costs treated as a non-reimbursable cost center on the hospital’s cost report;
  • Meet all the requirements with regard to health and safety; and
  • Agree to the assignment, coverage and payment rules applied to independent ASCs.

The ASC also is surveyed and approved as complying with their specific conditions for coverage. (See References.) If a facility meets the above requirements, it bills the Medicare contractor on form CMS-1500 or the related electronic data set and is paid the ASC payment amount.

If a hospital-based facility decides not to become a certified ASC, it bills the FI on the CMS-1450 form or the related electronic data information (EDI) code set and is subject to hospital outpatient billing and payment rules as well as certification and participation requirements.

Specific Radiology Payment

Medicare will pay separately for certain radiology services that are provided integral to covered surgical procedures in ASCs. In this case, the word “integral” means that the services were provided immediately before, during or after a covered surgical procedure.

Medicare will pay ASCs for ancillary radiology services at the lesser of the ASC rate or the amount of the non-facility practice expense under the Medicare physician fee schedule (MPFS). The ASC may receive separate payment for the TC of the covered ancillary radiology procedure by using modifier TC with the code reported on the claim.

Radiology services that have a PC (professional component) or TC indicator on the MPFS database must be submitted with the TC modifier to indicate payment for the technical component of the procedure.

In addition, effective January 1, 2009, the ordering/referring physician must be reported on claims for diagnostic services submitted by ASCs. This information should be reported in Items 17 and 17b or the electronic equivalent.

If you are responsible for managing professional and technical component billing for radiology suppliers, physicians, and non-physician practitioners, keep the following in mind:

  • Under the prospective payment system (PPS) for acute-care hospitals, suppliers that render non-physician Part B services during inpatient stays are required to bill the hospitals, not the Medicare carriers, for those services.


  • Medicare claims-processing contractors cannot pay for the TC of radiology services furnished to patients in inpatient or outpatient settings. The TC payment for services performed for beneficiaries in a hospital inpatient stay are part of the hospital’s bundled DRG payment. Outpatient services provided are paid under the outpatient PPS.

A periodic review of billing practices is a prudent step to avoid incorrectly billing of the TC for radiology services.

About the Author

Randy Wiitala, BS, MT (ASCP) is a senior healthcare consultant with Medical Learning, Inc. (MedLearn), St. Paul, MN. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that will equip healthcare organizations with their coding, chargemaster, reimbursement management and RAC solutions.

Contact the Author


To comment on this article please go to editor@racmonitor.com




ASC Conditions for Coverage: Section 416.40-49

http://www.access.gpo.gov/nara/cfr/waisidx_06/42cfr416_06.html. Related survey requirements are published in the State Operations Manual.


Randy Wiitala, BS, MT (ASCP)

Randy Wiitala, BS, MT (ASCP) conducts CPT coding and chargemaster assessments, reviews provider operations for regulatory agency compliance, evaluates administrative policies and procedures and assists in the development of quality-assurance programs. He's also a frequent seminar presenter, speaking to hospitals, corporations, clinics, state hospital associations and professional organizations. These educational programs cover a variety of areas, such as coding, regulatory compliance and reimbursement for laboratories; chargemaster system management; and APCs. Randy contributes to a number of MedLearn books, as well as the Laboratory Compliance Manager newsletter. He is the project lead on MedLearn's RAC Outpatient Data Analytics. He is a member of the American Society of Clinical Pathologists, the National Certification Agency and Healthcare Financial Management.

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