Medicare Cost Savings

Not only are ASCs focused on ensuring that patients have the best surgical experience possible, they also provide cost-effective care that saves the government, third-party payers and patients money. Because ASCs are highly specialized and function on a much smaller scale, they are able to provide services at a lower price than a full-service hospital.

Since 1982, when Medicare began reimbursing ASCs, the industry has saved the program billions of dollars. Today, with more than 5,900 Medicare-certified facilities across all 50 states, ASCs perform an estimated 22.5 million procedures each year. On average, Medicare saves more than $4.2 billion annually when surgical procedures are performed at ASCs instead of hospital outpatient departments (HOPDs). Likewise, Medicaid and other insurers benefit from lower prices for services performed in the ASC setting.

In addition, patients typically pay less coinsurance for procedures performed in ASCs than for the same procedures in the hospital setting. For example, a Medicare beneficiary could pay $515 in coinsurance for a cataract extraction procedure performed in a hospital outpatient department, whereas that same beneficiary's copayment in the ASC would be only $313.

Without the emergence of ASCs as an option for care, health care expenditures would have been tens of billions of dollars higher over the past four decades. Private insurance companies tend to save similarly, which means employers also incur lower health care costs when employees have the outpatient surgery they need in ASCs. For this reason, both employers and insurers have recently been exploring ways to incentivize the movement of patients and procedures to the ASC setting.

What the Experts Are Saying

An analysis of actual Medicare claims data released in 2020 by internationally recognized health economics and policy consulting company KNG Health Consulting, LLC, shows that ASCs reduced Medicare costs by $28.7 billion from 2011 through 2018 and projects that ASCs can be expected to reduce Medicare costs by an additional $73.4 billion from 2019 to 2028. In 2018 alone, that analysis shows, Medicare savings tied to ASCs totaled $4.2 billion. In 2028, they are projected to be more than $12 billion each year. You can learn more about the cost reductions ASCs offer Medicare and some of the specialties driving future trends in the full report.

The 2020 KNG analysis provides an update to a study published in 2013 by researchers at the prominent University of California-Berkeley Nicholas C. Petris Center on Health Care Markets and Consumer Welfare. That study also found that ASCs provide billions of dollars in savings to the Medicare program and its beneficiaries. Specifically, the Berkeley researchers found that ASCs saved Medicare $7.5 billion over the four-year period from 2008 to 2011 and, going forward, predicted that ASCs had the potential to save the Medicare system an additional $57.6 billion over the next decade. Learn more about the UC-Berkeley analysis in the full study.   

A report issued by the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) found that outpatient surgical procedures performed in ASCs had saved Medicare more than $1 billion annually for several years—and had the potential for even greater savings in the future. As a result of the cost-savings that ASCs offer, the report concluded, “…Medicare saved almost $7 billion and beneficiaries saved an additional $2 billion during CYs 2007 through 2011. Also, Medicare and beneficiaries could save an additional $12 billion and $3 billion, respectively, during CYs 2012 through 2017.” You can get a copy of the full report on ASCA’s website.

Also, a 2016 review of commercial medical-claims data found that U.S. healthcare costs are reduced by more than $38 billion per year due to the availability of ambulatory surgery centers (ASCs) as an appropriate setting for outpatient procedures. More than $5 billion of the cost reduction accrues to the patient through lower deductible and coinsurance payments. That study also projected that ASCs could reduce costs by $55 billion each year if more procedures were to move into the ASC setting.

Of course, cost savings are only part of the story. The value ASCs provide is a combination of cost and quality. A study published in Health Affairs finds that ASCs save money and increase efficiency for Medicare, insurers and patients alike, while providing the same high-quality care as HOPDs. That study, conducted by health economists Elizabeth Munnich of the University of Louisville and Stephen Parente of the University of Minnesota, concludes that “ASCs are a high-quality, lower-cost substitute for hospitals as venues for outpatient surgery.” The full study can be read in the May 2014 issue of Health Affairs.