By William Prentice
Results of a study released in June demonstrate conclusively what ASC professionals have been saying for some time: ASCs can have a significant impact on reducing the cost of outpatient surgery in the private insurance market. In fact, the study shows that by providing a cost-effective alternative to hospital outpatient departments (HOPD), ASCs are already reducing private health insurance spending by $38 billion each year.
The same study concludes that $5 billion of that savings goes directly to patients through lower deductibles and coinsurance payments. It also shows that ASCs have the capacity to save payers and patients much more.
The study results come from an analysis of data derived from more than 400,000 de-identified private health insurance claims collected across the country in 2014. Health Care Bluebook, a national provider of quality and cost data for health care services, conducted the analysis, and HealthSmart, the nation’s largest independent administrator of health plans for self-funded employers, supplied the data for the study. ASCA contributed technical assistance and expertise.
The $38 billion figure means that, each year, private insurance providers and their beneficiaries save an amount equal to Medicare’s total spending on all hospital outpatient care. What do all of these findings mean for patients and employers across the country?
To answer that question, let’s begin by looking at Charlotte, North Carolina, where the average ASC price for a knee arthroscopy was $6,118, while the average HOPD price was more than twice as expensive at $12,493. For a Charlotte patient with a Silver Health Insurance Plan as defined by the Affordable Care Act (including a $2,700 deductible, 80 percent coinsurance and a $5,000 maximum out-of-pocket threshold), the cost savings that the ASC offered was about $1,275.
Applying the same plan design to a cataract surgery in Charleston, West Virginia, where annual per capita income is about $35,000, a typical patient saved $566 by choosing an ASC instead of an HOPD. The insurer of that patient realized a savings of $2,264.
Clearly, the price variability identified in this study has significant implications for patients, particularly those with high deductibles. When a patient pays $5,000 for a cataract surgery that is available for $2,500 in another setting, the additional $2,500 comes straight out of his or her pocket. This is money that could be used to keep a car running so a patient can get to work or to pay for food, housing and education.
This study also shows that employers across the country can realize savings of up to 4 percent of their total spend by making better use of the more cost-effective providers in their existing networks, but these savings will not accrue without some additional work. To realize these savings, employers have to:
- understand their spending data and what is happening in their network in the locations where their employees live and work;
- employ benefit designs that encourage consumerism, such as high deductible and consumer-directed plan designs; and
- educate their employees and provide them with the price and quality transparency tools they need to be effective health care consumers and even consider rewarding members when they make good, cost-effective choices on care.
Although this particular study did not examine the quality of care available in HOPDs and ASCs, recent research and results of Medicare’s national quality reporting program released this year suggest that ASCs provide a quality of care equal to our country’s top hospitals. Also, while this study concerns only privately insured patients, a study conducted in 2013 by researchers at the University of California-Berkeley demonstrates that ASCs also save Medicare and its beneficiaries approximately $2.3 billion each year.
With health care spending in the country topping $3 trillion this year, it is hard to find opportunities for savings that don’t rely on rationing or compromising quality. The message is clear: ASCs offer value that can’t be ignored.
Patients, physicians, employers and public and private insurers all need to work together to empower patients to make smart choices about where to receive the outpatient surgical care they need. Together, we can significantly lower the cost of care, increase access to care and help patients lead healthier lives.
William Prentice is the chief executive officer of the Ambulatory Surgery Center Association.