Last month, the Centers for Medicare & Medicaid Services (CMS) released a new online tool to display cost differences for Medicare payments and copayments between hospital outpatient departments (HOPD’s) and ambulatory surgery centers (ASC’s). The new tool called Procedure Price Lookup helps patients with Medicare consider potential cost differences (average Medicare payments) when choosing where to have a medical procedure that best suits their needs. The costs do not include professional service fees however.
This tool is part of CMS' e-Medicine initiative, which includes drug pricing and spending dashboards. Between HOPD’s and ASC’s, costs can be quite different. For example, knee arthroscopy (with a meniscus repair) is $1,024 in an ASC versus $2,116 in an HOPD. That’s a $1092 difference between the two settings. Medicare beneficiaries without supplemental insurance also have a co-pay of $256 in an ASC versus $529 in an HOPD.
Prepare for Impact
Depending on how many consumers use Procedure Price Lookup and if the price differential is significant, case volumes would clearly change to favor one setting over the other.
As patients have more information about the costs of procedures, healthcare facilities should prepare for changes in activity levels and patterns at facilities.
Physicians would also be affected in at least two ways. First, some patients are likely to ask about the price comparison in discussing elective surgery with their physicians. Second, physicians who co-own ACS’s might benefit if more patients choose ASC’s for their surgical procedures.
Effects of Price Transparency
According to a study by The American Surgeon, ASC’s adopting price transparency can see increases in surgical volume, revenue and patient satisfaction.
In the study, the authors identified ASC’s that list prices online in the Free Market Medical Association database. The study revealed that:
Patient volume increased by a median of 50 percent in one year (among five ASC’s that reported their patient volume and revenue after adopting price transparency).
Revenue increased by a median of 30 percent (among four centers that reported a revenue increase.
Third-party administrator contracts increased as reported by three ASC’s.
Administrative burden reduced as reported by three centers.
Patient satisfaction and patient engagement increased after adopting price transparency as reported by five ASC’s.
More transparency to come?
On July 25, U.S. House Representative Daniel Lipinski, D-Ill., introduced a bill called the "Hospital Price Transparency and Disclosure Act of 2018". The bill would require all hospitals and ASC’s to disclose charges of the top 100 inpatient and outpatient procedures for both insured and uninsured patients. To become law, the bill must be passed by Congress and signed by President Trump.
CMS also finalized the hospital price transparency requirement in the 2019 Inpatient and Long-Term Care Hospital Prospective Payment System rule in August 2018. Hospitals are required to publish a list of their standard charges on the Internet or available upon request in a machine-readable format that can be easily imported into a computer system. This new change will take effect January 1, 2019.
With more price transparency and more procedures moving towards the outpatient setting, ASC’s are ripe for growth. As the industry moves toward a patient-centered healthcare system, price transparency will be considered a top priority.