Wage Adjustment of Base Payment Rates

The payment rates established for ASC procedures (see §30) are standard base rates that have been adjusted to remove the effects of regional wage variations. When contractors process claims for ASC services, they adjust the base rates for services subject to geographic adjustment to reflect the wage index value applicable to the area in which the ASC is located.

The Medicare payment for ASC services is equal to 80 percent of the wage-adjusted standard payment rate. Beneficiaries are responsible for a 20 percent coinsurance payment for ASC services once their deductible is satisfied. The exception is for colorectal cancer screening colonoscopies and screening flexible sigmoidoscopies. There is no deductible and a 25 percent coinsurance payment applies for these services. Use Medicare Summary Notice (MSN) 18.23, "You pay 25% of the Medicare-approved amount for this service.”

The wage index includes the wage and salary levels of certain health care professionals in both urban and nonurban locations, compared 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 l.0.

Each Core-Based Statistical Area (CBSA) within a State has a separate index. If a specific city or county does not have a CBSA value, the default is to the overall state wage index.
For dates of service on or after January 1, 2008, the ASC payment rates are geographically wage adjusted based on the wage index for the CBSA. Beginning January 1, 2008 CMS calculates and makes available to the contractors CBSA-specific ASC payment rates for services subject to geographic adjustment. The wage index values for  urban and rural areas that CMS applies to all non-acute providers are used in the calculation of the ASC wage adjusted payment rates. With the implementation of the ASC revised payment system, the labor related portion of the payment rate is 50 percent and the remaining non-labor related portion is 50 percent.

There is no adjustment for geographic wage differences for the following:

Corneal tissue acquisition;

Drugs and devices that have pass-through status under the OPPS;

Brachytherapy sources;

Payment adjustment for NTIOLs; and

Separately payable drugs and biologicals.