Renting Operating Room Time: What is Fair Market Value?
Ambulatory surgery centers (ASCs) often enter into operating room rental arrangements with surgeons and patients needing treatments not covered by traditional insurance. These ASCs have adopted bundled pricing based on the amount of time surgeons and patients spend in the operating room.
Operating rooms are rented by plastic surgeons performing cosmetic surgeries, as well as lawyers and surgeons serving patients involved in personal injury lawsuits.
Outside the operating room, patients are still getting care in pre-op and post-op areas, but the market has found it simplest just to bundle pricing for everything based on the amount of time the surgeon and patient are in the operating room.
The ASC itself is a major investment in facilities, fixed and movable equipment, software, and supplies. There is also a small army of staff members in pre-op, intra-op, post-op, sterilization, supply chain, and the business office that make a surgery center function. Most of these labor costs are fixed. Management can send some staff home when business is slow, but ASCs will usually not open for business unless they can schedule multiple surgeries on the same day.
Sophisticated cost accounting analysis is too complicated and tedious to allocate all these costs down to individual surgeries. Fortunately, the market has priced ASC operating room time for us.
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Renting Operating Rooms: What is Fair Market Value?
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Medicare publishes a reimbursement fee schedule for all ASC surgeries and procedures, as well as the median intraoperative operating room time for every procedure. Using arithmetic, we can calculate the Medicare reimbursement for the most common ASC services divided by intraoperative operating room time for each procedure.
Renting Operating Room Time: 2024 Medicare Rates
| Specialty | HCPCS Code | Service Mix 2022 | 2024 Medicare ASC Rate | Median IntraService Time | Hourly Rate |
|---|---|---|---|---|---|
| Gastrenterology | G0105 | 135,146 | 474.10 | 25 | 1,137.84 |
| Gastrenterology | 45378 | 84,189 | 474.10 | 25 | 1,137.84 |
| Gastrenterology | G0121 | 81,972 | 474.10 | 25 | 1,137.84 |
| Gastrenterology | 45385 | 440,399 | 612.14 | 30 | 1,224.28 |
| Gastrenterology | 45380 | 409,133 | 612.14 | 28 | 1,311.73 |
| Gastrenterology | 43248 | 39,966 | 470.23 | 20 | 1,410.69 |
| Gastrenterology | 43239 | 460,863 | 470.23 | 17 | 1,659.64 |
| Gastrenterology | 43235 | 42,026 | 470.23 | 15 | 1,880.92 |
| Gastrenterology | 43249 | 33,517 | 831.82 | 20 | 2,495.46 |
| Interventional Pain | 64483 | 36,756 | 472.81 | 15 | 1,891.24 |
| Ophthalmology | 65855 | 30,834 | 133.27 | 10 | 799.62 |
| Ophthalmology | 15823 | 29,603 | 945.97 | 45 | 1,261.29 |
| Ophthalmology | 66821 | 223,378 | 301.52 | 11 | 1,644.66 |
| Ophthalmology | 66982 | 99,737 | 1,183.70 | 30 | 2,367.40 |
| Ophthalmology | 66984 | 1,233,570 | 1,183.70 | 20 | 3,551.10 |
| Orthopaedic | 29827 | 24,505 | 3,392.92 | 120 | 1,696.46 |
| Orthopaedic | 64721 | 21,558 | 897.77 | 25 | 2,154.65 |
| Orthopaedic | 29881 | 16,312 | 1,518.92 | 40 | 2,278.38 |
| Orthopaedic | 27130 | 14,467 | 9,238.05 | 100 | 5,542.83 |
| Orthopaedic | 27447 | 30,174 | 9,048.76 | 97 | 5,597.17 |
| Pain Management | 62323 | 36,515 | 358.73 | 15 | 1,434.92 |
| Pain Management | 64483 | 43,355 | 472.81 | 15 | 1,891.24 |
| Pain Management | 64493 | 31,277 | 472.81 | 15 | 1,891.24 |
| PM&R | 62323 | 29,809 | 358.73 | 15 | 1,434.92 |
| PM&R | 64483 | 74,037 | 472.81 | 15 | 1,891.24 |
| PM&R | 64493 | 31,651 | 472.81 | 15 | 1,891.24 |
| Urology | 52000 | 77,089 | 313.22 | 10 | 1,879.32 |
Using weighted averages, national Medicare reimbursement ranges from about $1,100 per hour of room time for gastroenterology cases up to about $5,500 per hour for some orthopaedic surgery cases. For the 27 procedures above, weighted average national Medicare reimbursement is about $2,200 per hour of operating room time.
Commercial insurance often piggybacks on Medicare rates between 125% and 150% or more of Medicare reimbursement. So $3,300 per hour for operating room time would be a reasonable estimate under commercial reimbursement rates.
From a compliance standpoint, you want to avoid underpricing operating room time. With respect to the federal Anti-Kickback Statute, a compliance concern would be that an ASC is giving operating room time to surgeons at less than Fair Market Value in exchange for surgical referrals.
It would be difficult for a U.S. attorney to argue that Medicare was paying less than Fair Market Value, so copying or mimicking Medicare’s effective hourly rates would probably be a safe lower limit for most ASCs.
That being said, do NOT rely on the national rate weighted average cited here of about $2,200 per hour of operating room time. You also need to adjust 50% of your hourly rental rates for your local wage index. Wage index adjustments can decrease hourly rates 15% in parts of Mississippi or increase hourly rates up to 45% in parts of California.
Also, do not feel that you need to limit your operating room rental rates to Medicare levels. If you operate an ASC, by all means, charge as much as the local market will pay. Care provided under Letter of Protection agreements is sometimes reimbursed at 100% of gross charges. If you are in the business of treating personal injury patients directly under Letters of Protection, consider benchmarking your gross chargemaster against the rest of your market.
Need pricing for renting operating rooms at ASCs?
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