It has been observed a number of times that the same health care service may have different costs in different settings, and most notably, that services performed in hospital outpatient departments frequently have much higher costs. A previous study found that Medicare paid far more for surgeries in hospital outpatient settings than in ambulatory surgery centers, with ASCs generally receiving 54% of what HOPDs are paid for the same procedure. A new study, sponsored by the ASC trade association, so keep that in mind, finds that for commercial health plans, ASCs can create substantial cost savings. (ASC Study) Using a private health plan database, the researchers estimated that spending was reduced $38 billion due to use of ASCs instead of more costly hospital surgery centers. Patients benefit as well, by $5 billion in reduced spending, because they have lower deductible and coinsurance outlays. ASCs are able to accept lower spending because they generally are more efficient and they focus on fewer procedures.
Thirteen high-volume procedures were analyzed for price differences using data from 2014. The differences were adjusted to account for higher risk patients being treated in hospital surgery centers. Looking at cataract surgeries for example, the authors found as much as a threefold variation in cost in some locations, and almost all the variation is due to facility charges, with hospitals being much more expensive than ASCs. The hospitals are able to charge more in part because their overall market power allows them to force health plans to make all the hospital services in-network, even if some are more costly than alternative sites. If all surgeries which could be done in ASCs were done there, additional savings of $38 billion would accrue to private payers. Policymakers need to address this issue. Health plans should be allowed to incent members to use the cheaper sites of service and certainly for Medicare and Medicaid, the same price should be paid for the surgery regardless of where it is performed. This is a relatively easy win for reducing health spending, one that is not being addressed solely because of hospital lobbying and political power.