ASCs vs HOPDs – Understanding Payment Difference

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When performing outpatient procedures, many orthopedic surgeons operate in either ASCs or a hospital-based outpatient department (HOPD). Although some of the workflows and services offered may appear similar between the two, the background operations are substantially different from business and regulatory perspectives. An HOPD is owned by and typically attached to a hospital, whereas an ASC is considered a standalone facility. The goals of this study were to compare the utilization and cost of ASCs vs HOPDs.

The difference between an ASC and HOPD specifically refers to the regulations that apply to the center; therefore, a “freestanding” surgery center can still be classified as an HOPD if it is within a 35-mile radius of the hospital and falls under the same financial and administrative contracts. Similarly, a facility can be operated by a hospital and still maintain ASC status if it is an independent entity financially and administratively with its own Medicare agreement. Furthermore, ASCs must comply with the ASC Covered Procedures List, which is aimed at ensuring that procedures with the appropriate level of risk are performed in these freestanding centers.

Payment Overview and Research

In general, ASCs command lower rates than their HOPD counterparts. Using Medicare as an example, when outpatient surgeries shift from an HOPD setting to a freestanding ASC, the Medicare payment methodology changes from the Outpatient Prospective Payment System (OPPS) to the ASC fee schedule.

This shift is impactful because, although the ASC fee schedule is linked to OPPS payments, the inputs, and adjustments to the calculation are not the same. Medicare rates, a diagnostic colonoscopy (CPT® code 45378) would have an allowable payment rate of $709.98 in an HOPD setting, while the same procedure would have an allowable payment rate of $369.84 in a freestanding ASC (about 52 percent of the HOPD rate).