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Ambulatory Surgical Centers Billing Audits

Samoya Skeete
Samoya M. Skeete
Certified Coder and Healthcare Auditor
Ambulatory Surgical Centers Billing Audit Team Lead

Chris Anderson
Chris Anderson
Chief Compliance Officer
Ambulatory Surgical Centers Billing Audit Team Lead

For those not familiar with ambulatory surgical centers (ASCs), they are modern healthcare facilities that provide same-day surgical care and perform a wide range of diagnostic and preventive procedures. They comprise hospital-owned outpatient facilities, surgeon-owned free-standing ASCs, and free-standing ASCs owned by a surgeon and hospital in partnership. ASCs primarily perform ACL reconstruction, hernia repair, gastric bypass, and other surgeries that don’t require patients to remain hospitalized overnight for observation.

In addition to commonly performed surgeries, ASCs perform nonsurgical procedures that help diagnose and treat serious diseases, including endoscopes, colonoscopies, and radiation therapy. As of the writing of this article, there are roughly 8,500 ambulatory surgery centers in the U.S., up from 2.1% in 2022. But that year-over-year growth doesn’t necessarily mean all is well in America’s ambulatory surgery centers. Available data shows some of these state-of-the-art facilities have had their fair share of billing issues.

Why Many Ambulatory Surgery Centers Are at the Center of Medical Billing and Coding Audits

Ambulatory surgery centers are impressive in how they provide time-saving and cost-effective solutions for patients needing to undergo a specific surgery. The same applies to nonsurgical procedures necessary to diagnose and treat disease. But billing the patient’s insurance for services provided is another matter. Ambulatory surgery centers have gone through their fair share of coding audits with payers. Before getting into why that is, we should probably take a moment to learn a thing or two about audits and what they are. In a nutshell, a medical and billing coding audit is a process that ensures any claim reimbursements submitted by healthcare providers to payers reflect the services provided and ordered for a patient. For reference, payers are typically Medicare and private insurance companies. Many ASCs can get through the claim reimbursement with little to no trouble, but some, particularly Medicare-certified ASCs, seem to struggle. And not surprisingly, they are the ones who routinely find themselves at the center of a medical billing and coding audit, with most initiated by Medicare due to unintentional coding errors, missing or omitted patient information, and late claim submittals.

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Ambulatory Surgery Centers and Medicare

Ambulatory surgery centers and Medicare have a long and storied past, and the relationship between the two is far more complicated than ASCs and private health insurance companies. In 1983, Medicare incentivized hospitals to shift patient care from inpatient to outpatient departments, which led to ASCs treating more and more Medicare patients. Although such a move cost Medicare a small fortune, it allowed the national health insurance program to cut back on unnecessary overnight hospital stay costs. Today, the relationship between ASCs and Medicare is even more tight-knit, primarily because ASCs offer more surgical and nonsurgical services than they did in the 1980s. The most current and relevant data shows the number of ASCs in the U.S. grew from a little over $3 million to around $32 million between 1981 and 2005. And they perform more than 7 million procedures for Medicare patients each year.

Costs Savings and the Rise in ASC Billing Audits

To date, ASCs have saved Medicare an estimated $2.3 million on services for Medicare beneficiaries. But those savings have led to many ASCs becoming the subject of a Medicare billing and coding audit. The more services an ASC renders for Medicare beneficiaries, the more claims for reimbursement they have to send to Medicare. Considering the window to file a claim for reimbursement with Medicare is 12 months, many ASCs spend more time submitting claims for reimbursement and less time checking to ensure accuracy. And this leads to mistakes and audits.

Common Billing Errors That Lead to ASC Billing Audits

The ability to help Medicare save an impressive $2.3 million on services for Medicare beneficiaries speaks to the workload of the average ASC in terms of the number of patients they treat and the claims for reimbursement they must generate and submit each year. Available data shows Medicare covers right around 3,500 procedures under the ASC’s current payment system. Considering that the ASCs see thousands of Medicare beneficiaries who receive one or more of these procedures, it makes sense that employees in their billing departments would start to feel overwhelmed and become prone to making billing mistakes. While we are on the topic, ASCs use different CPT billing codes than hospitals, and the ones that they use sometimes require modifiers. Not surprisingly, this combination contributes to many billing mistakes and audits. Other things that can open the door to billing mistakes and audits include

Failing To Verify Patient Information

Failing to verify patient information is the root cause of many ambulatory surgical centers’ billing audits. Studies show this is usually the result of office staff rushing to get through the claim-submitting process. However, there could be many other reasons. Whatever the reason, payers will usually deny any claim for reimbursement received that contains incorrect or missing patient information. And if it happens too often, it can open the door to an ASC billing audit, not to mention compliance issues that could end in a contract termination. To avoid delay or nonreceipt of payment, ASCs must make sure that all claims for reimbursement sent to a payer contain the following verified patient information:

  • Patient’s full name and date of birth
  • Patient’s insurance details
  • Patient’s phone number and address

Failing To Verify Insurance

Like verifying their name, date of birth, address, and so on, verifying a patient’s insurance information is also critically important. After all, submitting a claim for reimbursement to a payer when a patient no longer has coverage or has had a change of coverage is a surefire to find yourself on the receiving end of a denial.

Submitting Incorrect Codes

Because medical billing entails submitting billable codes to payers that speak to a patient’s diagnosis and corresponding treatments, submitting claims for reimbursement with the correct codes is paramount. And this includes being mindful of the fact that ASCs and hospitals use different codes to reference many of the same diagnoses and treatments. That said, Medicare routinely denies claims for reimbursement that contain incorrect CPT, HCPCS, or ICD codes.

Failing to File a Claim Before Reimbursement Cut-off

Just like their name, date of birth, address, and so on, verifying a patient’s insurance information is also critically important. After all, submitting a claim for reimbursement to a payer when a patient no longer has coverage or has had a change of coverage is a surefire way to find yourself on the receiving end of a denial.

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Medical Billing Professionals Discuss How ASCs Can Minimize Billing Errors and Lower Their Chances of Being Audited

While it is next to impossible to avoid all billing and coding audits from Medicare, there are things that ASCs can do to minimize their chances of being subjected to too many of them, according to many professional billing services companies. The same applies to billing and coding audits from health insurance providers. Some of these things include

Billing for services not covered or not provided – Few things will get a claim for reimbursement denied faster than billing for services not covered by a patient’s insurance. The same applies to billing for services that a patient never received. Both can result in the denial of a claim and may raise enough suspicion with a payer to warrant a billing and coding audit.

Upcoding – Just like billing for services not covered or not provided, upcoding can also put ASCs on a fast track to being audited by Medicare or any other payer to which they submit claims for reimbursement. And this is because it constitutes Medicare fraud. For context, upcoding refers to intentionally assigning the wrong billing code to a medical procedure or treatment for a patient to increase the reimbursement due. Avoiding this practice can significantly lower an ASC’s chances of being audited by Medicare.

Unbundling – When a patient undergoes multiple treatments or procedures, the cost of those treatments and procedures must be bundled and submitted to Medicare as a single claim for reimbursement. Of course, ASCs receive less from Medicare when they do so. To receive more, many bill Medicare for each treatment and procedure individually, a form of Medicare fraud known as “unbundling.”

In summary, ASC billing audits are fundamental to owning and operating an ASC, which means they’re pretty much unavoidable. But not engaging in fraudulent practices and staying abreast of coding changes can help keep them to a minimum. Granted, that’s probably easier said than done, especially if you run a busy ASC. If this is the case for you, you should know that we have billing professionals who can work with you to streamline your billing processes, lower your chances of being audited, and, above all else, leave you with more time to focus on running your ASC. Consider scheduling a consultation today.