Medicare Could Save Additional $1.6 Billion by Providing More Procedures in ASCs Rather Than Hospitals

ALEXANDRIA, Va. -- Medicare would save more than a billion dollars a year if certain surgical procedures were performed in the nation's ambulatory surgery centers rather than hospital outpatient departments, according to a study conducted by The Moran Company.

The study, performed for the Federated Ambulatory Surgery Association, analyzed 2003 Medicare claims that included at least one surgical procedure payable by Medicare in both ambulatory and outpatient settings. The study re-priced the hospital outpatient department (HOPD) claims to 2005 Medicare rules and rates for ambulatory surgery centers (ASCs) and HOPDs and found:

* On average, claims cost $320 less in an ASC compared to an HOPD.
* Procedures performed in an ASC in 2005 will cost the Medicare program $1.1 billion less than if the same procedures were performed in an HOPD.
* If procedures performed in an HOPD -- that Medicare also reimburses ASCs for providing -- were instead performed in an ASC, Medicare would save nearly $1.6 billion more in 2005.

"This study makes it clear that Medicare should be encouraging patient access to ASCs, not limiting it," said Kathy Bryant, FASA executive vice president. "These findings should be very useful to Congress and the administration as it considers Medicare policies affecting patient access to ASCs."

The Moran Company identified and analyzed about 5 million HOPD claims as those Medicare would reimburse if performed in an ASC. It found that in 2005, claims in an outpatient hospital setting would cost Medicare about $4.4 billion in reimbursements. Claims for the same procedures done in ASCs would total about $2.8 billion, about $1.6 billion less than the cost to Medicare for the same procedures done at HOPDs. Claims averaged $891 in the HOPD, but only $571 in an ASC, a savings of $320 per claim for ASC procedures.

The Moran study attributed the difference in claims to the variation between the base payment rates for major procedures. Nearly 85 percent of the difference was due to HOPD rates for major procedures being higher than their equivalent ASC category rates.

It is estimated that more than 80 percent of surgery in the United States today is done on an outpatient basis. One out of every five procedures is performed in an ASC. In 2005, an estimated eight million Americans will undergo surgery in an ASC.

"ASCs consistently save patients and payers money. But more important, they are safe, efficient and focused exclusively on the well-being of the patient," said Jack Egnatinsky, MD, FASA president. "In a healthcare system plagued by inefficiency, excessive costs and a general lack of responsiveness, ASCs offer a better alternative for surgical care."

The Federated Ambulatory Surgery Association, the nation's largest association of ambulatory surgery centers, is a national, nonprofit association that represents the interests of those who operate and seek the services of ambulatory surgery centers throughout the nation. The organization represents 1,400 ASCs, the thousands of professionals who provide care and services in such centers and the patients who seek care there.

Source: Federated Ambulatory Surgery Association