NCPA - National Center for Policy Analysis

Medicare Excludes Procedures in Ambulatory Surgical Centers from Reimbursement

August 6, 2014

Ambulatory Surgical Centers (ASCs) are outpatient facilities. They are identical to hospitals, in terms of their available equipment and staff, and they have similar patient outcomes (with fewer infections).

Yet, ASCs are much less expensive, explains Brittany La Couture of the American Action Forum, because they are not subject to the same types of administrative requirements that hospitals are. In fact, ASCs tend to be 75 percent cheaper than hospitals. Because of this, private insurers encourage enrollees to use ASCs.

Medicare, on the other hand, lists 1,700 different procedures that the program requires to be performed in a hospital, rather than an outpatient facility, in order to qualify for Medicare reimbursement. Many of these procedures, La Couture explains, are procedures that are regularly performed in ASCs and should not be limited to inpatient settings. For example, total knee replacements are on the list, yet they are regularly performed in ASCs and for significantly less money than those performed in hospitals. Were a patient privately insured, he could seek treatment in an ASC.

Additionally, for ASC procedures that Medicare does reimburse, Medicare reimburses them at lower rates than it reimburses hospitals:

  • ASCs receive 56 percent of what hospitals would receive for performing an identical procedure.
  • Medicare uses different measures to calculate inflation when looking at hospitals and ASCs, leaving hospitals to receive inflation increases that are 300 percent higher than ASCs.

The Surgery Center of Oklahoma is an exceptionally successful ASC. The outpatient facility is transparent in its pricing, which is significantly less than prices charged elsewhere. For example, a $40,000 hip replacement (the price charged by most American hospitals) costs just $19,400 at the Surgery Center of Oklahoma.

Source: Brittany La Couture, "Ambulatory Surgical Centers and Medicare," American Action Forum, August 5, 2014.


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