Generally, ASCs are perceived as safe, high-quality, low-cost settings for many surgical procedures. Typically, ASC costs are lower than those in the similarly safe and high-quality settings of hospital outpatient departments (HOPDs), which also handle same-day surgeries.
However, the authors of a recent study found there is one striking exception: outpatient joint replacement surgery.1
The authors examined total knee replacement surgery and total hip replacement surgery in HOPDs and ASCs that occurred over a four-year period (2014-2017). Researchers focused on commercially insured patients. On average, under Medicare, payments to ASCs for total joint procedures are significantly less than payments to HOPDs.1
The authors did not consider outpatient procedures paid by Medicare, as the Centers for Medicare & Medicaid Services (CMS) removed total knee arthroplasty procedures from its inpatient-only list in January 2018, which is outside this study’s window. (Learn more about that CMS decision at: https://go.cms.gov/39ICAaI.) As of Jan. 1, 2020, total knee arthroplasty procedures are no longer part of Medicare’s inpatient only list. (Learn more at: http://bit.ly/2P42Rs8.)
“ASCs are growing as alternative surgical sites, so we compared ASC and HOPD prices,” says Kathleen Carey, PhD, a study co-author and professor of health law, policy, and management at Boston University.
Investigators used data from a large national claims database that showed actual prices paid to providers.1 “For the same procedure code [in Medicare], ASCs are paid [significantly less than] HOPDs,” Carey says. “What I was interested in seeing is whether the commercial sector payments were similar.”
Carey and her colleague found that most of the time, the commercial sector payments were similar, except for joint replacements. “That was a very different story,” she says.
The authors observed two trends. First, payments to HOPDs for total joint replacements were less than one-third of what ASCs received for each year of the study period. Second, payments to HOPDs rose each year from 2014 to 2017, while payments to ASCs declined over the same period.1
Payments to HOPDs for total knee replacement were $6,016 in 2014 vs. $23,244 to ASCs. By 2017, total knee replacement procedure payments to HOPDs had risen to $10,060, and payments to ASCs had declined to $18,234.
Meanwhile, HOPDs received $6,980 for total hip replacements in 2014 vs. $28,485 paid to ASCs. In 2017, HOPDs received $11,139 for hip replacements vs. $18,595 for ASCs.1
Notably, the authors acknowledged these figures apply to small patient populations. For total knee replacements in 2014, investigators studied the information of 67 HOPD patients and 68 ASC patients. In 2017, these numbers rose to 223 for HOPDs and 602 for ASCs.1 For hip replacements, there were 43 HOPD patients vs. 82 ASC patients in 2014. By 2017, it was 206 HOPD patients and 465 ASC patients.
One possible explanation for the higher ASC prices could be related to bundled payments in the HOPD setting, Carey offers. “Bundled payments is an alternative payment mechanism that’s getting a lot of traction, and knee and hip replacements are the most common bundles in the data,” she says. “This is not totally an apples-to-apples comparison, although we have no data to support that; it’s just speculation.”
Carey says she expects there will be further market adjustments in prices paid. Just as the amount paid to HOPDs has risen and the prices paid to ASCs has declined, this type of market adjustment may continue. Researchers have not yet studied similar data for 2018 and 2019, so they do not know how the trend played out more recently.
“We’ll look at that soon, and I expect to see the payments to be closer,” Carey reports. “I hope to see some convergence of those two lines because things are changing a lot.”
- Carey K, Morgan JR. Payments for outpatient joint replacement surgery: A comparison of hospital outpatient departments and ambulatory surgery centers. Health Serv Res 2020; Jan 23. doi: 10.1111/1475-6773.13262. [Epub ahead of print].