ASCs deliver lower costs but face uphill payment, regulatory challenges

Editor's Note

Ambulatory surgery centers (ASCs) continue to offer significant cost savings over hospital outpatient departments (HOPDs), but payment inequities, regulatory constraints, and growing competitive pressures are straining operations and growth prospects.

Recent data show wide cost differentials between settings, Becker’s ASC Review June 20 reports. A Blue Health Intelligence analysis found that procedures performed in HOPDs can cost up to 58% more than in ASCs or physician offices. Medicare’s own data show the average cost for cataract surgery at an ASC is $1,711, compared to $2,748 in an HOPD. Colonoscopy costs were consistently higher in hospitals across all 50 states, with private insurers paying 55% more in facility fees to hospitals than ASCs, according to a Johns Hopkins Bloomberg study published in JAMA Health Forum.

Despite these savings, payment policies disproportionately favor HOPDs. From 2001 to 2023, Medicare payments to hospitals rose by 70%, while physician payments grew by only 9%. When adjusted for inflation, physician pay actually fell 26%, the article reports. ASC administrators say these trends leave them at a disadvantage. Kathleen Hickman, RN, of Dutchess Ambulatory Surgical Center, described flat or minimal ASC reimbursement increases amid rising supply and pharmaceutical costs. She noted negotiating contracts with payers has become increasingly difficult, especially for independent centers trying to justify higher rates.

Regulatory and administrative pressures further complicate the landscape. Sean Hayes, president of the American Pain Consortium, pointed out that even when payers offer competitive rates, they are often undercut by complex billing rules, denials, and delayed payments. Alejandro Badia, founder of Badia Hand to Shoulder Center, added that HOPDs are typically subject to more operational restrictions than ASCs, although those same ASCs now face intensifying competition from hospital-affiliated facilities.

Despite these headwinds, the future outlook for ASCs is positive. A national study showed ASCs provided more outpatient cardiac interventions to patients from socially vulnerable communities than HOPDs between 2020 and 2022. And Sg2’s 2024 forecast projects ASC volumes to grow 21% over the next decade, outpacing the 17% growth projected for outpatient services overall.