Do HOPDs Deserve Higher Reimbursements Than ASCs?

Independent ASCs bemoan getting less money than hospital outpatient departments for the same cases. Health systems claim the dichotomy is justified.

Hospital outpatient departments (HOPDs) feel they’re being nicked financially from all directions, which could continue to result in the provision of less medical care to needy patients that extends well beyond elective surgery.

Site-neutral payment debate

Hospitals are already underpaid for patient care across the board, according to the American Hospital Association (AHA.) That structural reimbursement crisis would only get worse if more site-neutral payment policies are enacted to allow ambulatory surgery centers (ASCs) to be paid the same higher amount of money HOPDs receive for performing identical procedures.

“Hospitals have a higher cost structure than independent physician offices (IPOs) and ASCs due in part to the costs of standby capability and capacity,” says the AHA. “This standby role is built into the cost structure of hospitals and supported by revenue from direct patient care — a situation that does not exist for any other type of provider.”

The AHA says there are several important reasons to oppose additional site-neutral payment proposals.

HOPDs and ASCs are not the same

HOPDs aren’t simply same-day surgical centers for health systems. They also provide complex cancer, infectious disease, mental health and other services — and therefore should not be paid the same Medicare rate as standalone physician offices.

“Implementing site-neutral payment policies could force outpatient clinics to close or cut back on critical services, resulting in reduced patient access and job losses,” notes the AHA. “The cost of care delivered in hospitals and health systems, including HOPDs, is fundamentally different than other sites of care and thus needs to take into account the unique benefits that only they provide to their communities.”

Those benefits include maintaining standby capacity for natural and man-made disasters, public health emergencies, other unexpected traumatic events and delivery of 24/7 emergency care to all who enter their doors, regardless of ability to pay or insurance status. “Since the hospital safety net and emergency standby roles are funded through the provision of all outpatient services, expanding site-neutral cuts to additional HOPDs and the outpatient services they provide would endanger the critical role that they play in their communities, including access to care for patients, especially the most medically complex,” states the AHA.

De facto rural primary care offices

Emergency rooms and HOPDs are often the first point of care for many low-income individuals from rural and urban areas. HOPDs also serve many older Americans. “The more rural the county that a Medicare beneficiary lives in, the more likely their visits take place in an HOPD rather than a physician office,” notes the AHA. A KNG Health Consulting report prepared for the AHA in 2023 showed that, from 2019 to 2021, HOPD patients had higher medical needs and were more likely to be low-income and/or minorities compared to those seen in ASCs and IPOs. They were also more likely to have been in an ER or had a hospital admission in the three months prior to their HOPD, ASC or IPO visit.

A study published on the JAMA Network showed that significant rural hospital closures have increased travel times for surgical patients.

For the medically complex

UNDERPAID The American Hospital Association says Medicare has reimbursed hospitals for years at rates less than what it costs to care for patients.

A 2023 study shows HOPDs’ share of total joints arthroplasty appears safe, saying patients with health issues are getting their same-day hips, knees and shoulders done at HOPDs at a rising rate, while the rate for those patients at ASCs is declining. Nearly 12% of more than 222,000 shoulder and knee arthroscopies at HOPDs were performed on patients with high comorbidity rates, compared to less than 2% of 94,000 ASC patients. The study also found that unplanned hospital admissions following the procedures was lower for HOPDs than ASCs, although the stays were longer.

Shakeel Ahmed, MD, CEO of Atlas Surgical Group, with ASCs in Illinois and Missouri, says HOPDs would still make enough money if they only performed surgical procedures on patients with significant comorbidities. ASCs were created as a financial move, he notes, not just for facility owners, but to save the healthcare system significant money.

“We’re in this together — no ASCs can survive without hospital outpatient surgical departments simply because there is a subset of patients that can’t be serviced on an outpatient basis in an independent freestanding facility,” he says. “The reality is that we need each other. Sadly, my view is that only one side (the ASCs) seems to acknowledge that openly. The system actually pays quite well for complex surgeries. In a perfect world, all safer patients would move to outpatient settings. Money needs to take a backseat for hospital leaders’ priorities so that patients can get care in less expensive settings that would also help the country’s healthcare economy.” OSM