ASCs Reduce Medicare Costs by More than $4 Billion Each Year


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ASCs Reduce Medicare Costs by More than $4 Billion Each Year

A KNG study reveals

SEPTEMBER 2020

ASCA released a new analysis of Medicare payment data this week that shows performing outpatient surgery procedures in ASCs, instead of in higher-cost hospital outpatient departments (HOPD) from 2011 through 2018, saved Medicare $28.7 billion. The analysis, conducted by KNG Health Consulting LLC, projects that without any policy changes, procedures provided to Medicare patients in ASCs are expected to reduce program costs by an additional $73.4 billion from 2019 to 2028.

The study data shows that Medicare savings per year increased from $3.1 billion in 2011 to $4.2 billion in 2018. Those savings are expected to grow steadily to more than $12 billion in 2028.

The analysis also projects that an expected shift in a percentage of total knee arthroplasties from the HOPD to the ASC setting will result in an additional $2.95 billion in savings to the Medicare program between 2020 and 2028. Medicare did not reimburse ASCs for providing this procedure to its beneficiaries before 2020.

“This study provides data that Medicare officials and everyone committed to reducing the cost of healthcare need to consider,” says ASCA Chief Executive Officer William Prentice. “With a few policy changes to encourage the migration of more procedures into the ASC setting, Medicare savings could accelerate and more Medicare patients would have access to the quality care that ASCs offer.”

Other findings concerning Medicare savings generated when procedures are provided in ASCs rather than HOPDs include:

  • While most of the savings from 2011 to 2018 are attributed to a stable group of high-volume procedures, especially cataract surgeries and colonoscopies, projected savings for 2019 to 2028 are expected to be driven by growing specialties such as endocrine, cardiovascular and orthopedic surgery.
  • Four specialty areas—eye and ocular adnexa, cardiovascular, nervous system and digestive system surgery—each accounted for more than $3 billion in total savings from 2011 to 2018.
  • By 2028, five specialty areas—eye and ocular adnexa, cardiovascular, nervous system, digestive system and musculoskeletal surgery—are each projected to save Medicare more than $1 billion per year.

Healthcare intelligence firm Sg2 projects that 85 percent of all healthcare procedures will be performed outpatient by 2028, due in large part to advances in specialties like orthopedics, cardiology and spine, which are still overwhelmingly performed on an inpatient basis. The Centers for Medicare & Medicaid Services tends to be more conservative than private payers in approving procedures for outpatient reimbursement due to the higher-risk nature of its beneficiary pool. In 2019, however, the agency finalized proposals allowing new complex procedures, including coronary interventions and total knee replacements, to be reimbursed in ASCs. The extent to which these procedures, and others like them, shift to the ASC setting will strongly influence the amount of savings the Medicare program and its beneficiaries will realize in coming years.

More information about the study, the methodology used to conduct the analysis and the analysts’ findings is available in the full report Reducing Medicare Costs by Migrating Volume from Hospital Outpatient Departments to Ambulatory Surgery Centers.

More than 5,800 Medicare-certified ASCs across the country currently provide services to Medicare beneficiaries. On average, Medicare pays ASCs one-half of HOPD rates for the same procedures, meaning that every time a procedure for a Medicare beneficiary is performed in an ASC instead of an HOPD, the Medicare program saves money.