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Home > Archive > August 2000

How to Calculate Labor-Adjusted ASC Payment Rates

I know that there are eight national ASC payment rates associated with Medicare's List of Covered Surgical Procedures for Ambulatory Surgical Centers. But how do carriers calculate the labor-adjusted payment rates to reflect the geographical location of my ASC?

A.

The following are the current national ASC payment group rates (from the Medicare Carrier's Manual, Transmittal No. AB-99-67, September 1999) that were effective for services rendered October 1, 1999:
- Group 1: $317
- Group 2: $425
- Group 3: $486
- Group 4: $600
- Group 5: $683
- Group 6: $794*
- Group 7: $949
- Group 8: $934*

HCFA established these rates using data that were adjusted to remove the effects of differences in wage levels from area to area. To make the national base payment group rates applicable to your area, you need to do a rather complex calculation.

First, find out what your area's wage index is. You can do so by contacting your Medicare Carrier, or by obtaining the Medicare Carrier's Manual, Transmittal No. AB-99-67, September 1999.

The wage index, which HCFA derived from the hospital inpatient prospective payment system, relates the wage and salary levels of certain health care workers in a particular location to a national norm of 1.0. Areas with above-average wage levels have index numbers greater than 1.0, while areas with below-average wage levels have index numbers below 1.0. Each Metropolitan Statistical Area (MSA) within a state has a separate index, and there is one index for all rural areas within a state. For example, for Baltimore, Md., and surrounding counties, the wage index is 0.9891; the wage index for rural Maryland counties is 0.8631.

*Includes a $150.00 intraocular lens (IOL) allowance.

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