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Driving Change in 2014

by William Prentice

In 2013, an analysis conducted by researchers at the University of California-Berkeley Nicholas C. Petris Center on Health Care Markets and Consumer Welfare revealed that between 2008 and 2011, ASCs saved Medicare and its beneficiaries $7.5 billion. Over the next decade, the researchers found, ASCs have the potential to save the Medicare system an additional $57.6 billion.

According to the study, $6 billion of the savings associated with the federal Medicare program between 2008 and 2011 went to the Medicare system and the remaining $1.5 billion went straight to the program’s beneficiaries. In other words, Medicare patients nationwide saved $1.5 billion thanks to the cost-effective care that ASCs provide.

When the study results were released in September, University of California-Berkeley Adjunct Professor Brent Fulton, who participated in the analysis, recommended the following:

“With policymakers looking for ways to shore up Medicare’s finances and reduce healthcare spending nationwide, our analysis suggests that ASCs offer a win-win for policymakers and patients. Encouraging patients to seek the care they need in ASCs throughout the Medicare system should be an easy decision. Indeed, depending on the future policy environment, the savings generated by ASCs could exceed our $57.6 billion estimate.”
The study’s authors also recognized that if policymakers were to support policies that enable ASCs to continue to save money for the Medicare system, the program’s beneficiaries would also continue to save. These savings accrue because the Medicare payment system determines beneficiary copays as a percentage of the procedure costs, and for many years, has paid ASCs at a percentage that is well below what it pays hospital outpatient departments (HOPD) for performing the same procedures. That percentage has been steadily declining. In 2003, it averaged 86 percent, and in 2013, 58 percent.

When the study was released, on behalf of the ASC community and ASCA, I encouraged Congress and the Obama Administration to work to ensure that Medicare payments to ASCs remain sufficient to continue the savings to the program and its beneficiaries that ASCs provide. I pointed out that the power of the price differential between ASCs and HOPDs that produces these savings has limits. I also noted that ASCs were already at or beyond that level as evidenced by stalled growth in the number of ASCs and recent ASC to HOPD conversions made to take advantage of the higher fees that HOPDs command.

OR Today Magazine | ASC Updates | Industry Insights | Driving Change in 2014

Fast forward to 2014. As we begin this new year, the outpatient surgical care that ASCs provide is projected to become an ever more popular alternative for patients, including Medicare beneficiaries. ASCs have also begun to operate under Medicare’s new ASC payment rule, which took effect on January 1.

Key components of that new rule include the following:

  • 1.2 percent rate update for ASCs, 1.7 percent rate update for HOPDs;
  • the Centers for Medicare & Medicaid Services (CMS) continues to update ASC payments each year based on the Consumer Price Index for all Urban Consumers (CPI-U) and HOPD payments by the hospital market basket, which has historically outpaced the CPI-U;
  • due to the different update factors, the gap between ASC and HOPD payments widens, and in 2014, means that ASCs are being paid 55 percent of what HOPDs receive for the same procedures;
  • a problematic bundling proposal was finalized for HOPDs and ASCs;
  • ASCs saw no change in problematic device reimbursement policies that sometimes mean that they cannot provide certain procedures without losing money;
  • only four additional procedures were approved for reimbursement in the ASC setting although reasons why others proposed for inclusion were rejected were not provided; and
  • three of four quality measures included in the 2014 proposed payment rule were finalized despite opposition to all four measures from ASCA and the ASC Quality Collaboration.

Instead of using this latest update of its ASC payment system to support ASCs and make it easier for patients to take advantage of the lower cost, high-quality care that ASCs provide, CMS has enacted policies that continue to encourage the ASC to HOPD conversions that cost the federal program more. The agency also failed to address significant roadblocks to patient access to that care.

In 2014, ASCA will continue to work with members of Congress and federal regulatory officials to educate them about the full impact of these decisions and encourage them to turn this situation around. If you own or work in an ASC, I urge you to be involved. If you are not already a member of ASCA, I encourage you to join. If your membership is current, please start making plans now to participate in our advocacy efforts in some way in 2014.

You can learn more about ASCA, ASCA’s membership opportunities and our advocacy program online at or by calling 703.836.8808. To be as effective as possible, we need the entire ASC community behind us. Please help ASCA drive the change that is needed this year.

William Prentice is the chief executive officer of the Ambulatory Surgery Center Association.



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