A tale of two reimbursements
Surgical procedures didn’t just move from hospitals to ASCs – they also moved to hospital outpatient departments.
And the reimbursement rates in hospital outpatient departments are considerably higher than those at ASCs.
“All I can say is that hospitals must have a strong political influence,” said Bradley Black, MD, in an interview with Ophthalmology Times. “It would make sense to have a mandate to perform all cataract surgeries in an ASC, which would save healthcare and insurance companies millions of dollars a year.”
Dr. Black, an ophthalmologist in Jeffersonville, Indiana, is not the first – or last – healthcare professional to question the reimbursement gap between ASCs and hospital outpatient departments.
A critique by the Rand Corporation
In 2011, a study by the Rand Corporation examined the payment differentials between hospital outpatient departments, ASCs, and physician’s offices. From their findings, they confirmed that payments tend to be higher in hospital outpatient departments compared to other settings.
They also determined that “the higher payments for services provided in HOPDs do not appear to be justified based on differences in patient characteristics or the content of services provided in HOPDs relative to other ambulatory settings.”
In 2015, study published in the journal Health Affairs examined the payment provided to both hospital outpatient departments and ASCs over time. They found that prices paid to ASCs grew in line with general medical care prices, whereas prices paid to hospital outpatient departments climbed sharply – even for the same procedures.
“Hospitals claim higher HOPD rates are justified because hospitals treat sicker patients, maintain higher cost emergency and twenty-four hour services, and provide care to vulnerable populations,” writes Joel Zinberg, M.D., J.D., F.A.C.S., in an article on Inside Sources. “But these assertions do not justify paying higher rates for the same physicians performing the same services on the same patients in the same locations just because the hospital has acquired and relabeled it as an HOPD.”
A slippery slope
In 2016, Avalere Health, a DC-based healthcare consulting firm, chose to examine Medicare payment differentials for episodes of care across hospital outpatient departments, physician offices, and ASCs for three common procedures: cardiovascular imaging, colonoscopy, and evaluation and management (E&M) services. They performed a comprehensive literature search on the subject before analyzing Medicare claims data in-depth. The researchers also applied a risk adjustment methodology to control for patient demographics, comorbid disorders, and disease severity.
From their research, they found that not only do procedures conducted in HOPDs result in higher payments than those performed in physician offices and ASCs, but that these higher payments are tend to be followed by other higher payments for related procedures. This remained true even when the researchers applied the risk adjustment methodology.
In other words: hospital reimbursement rates just seem to be higher.
“The long-term growth in the number of patients treated in ASCs, and resulting cost savings, is threatened by the widening disparity in reimbursement that ASCs and hospitals receive for the same procedures,” writes the ASC Association in an article about the growing trend of ASC outpatient surgery.
The bottom line
For a small percentage of patients – specifically, patients with serious health issues – an ASC would not be a feasible setting.
But what about everyone else?
It depends. ASCs tend to be more efficient and allow physicians to have more control over their operating environment. Hospitals, meanwhile, lead to greater Medicare reimbursement rates.
In the end, it depends on whether you feel that the benefits of performing procedures at an ASC outweigh the costs.