Data Sources
The analysis used Medicare Fee-for-Service claims files to identify procedure-level paid amounts, outpatient procedure volumes and the share of outpatient procedures performed at ASCs. Future growth in the Medicare population was estimated using census data, the Medicare Trustees annual report and Medicare Advantage penetration rates reported by the Centers for Medicare & Medicaid Services. CMS Addendum B and ASC Addendum AA were used to determine baseline payment rates.
Past Savings
For each year from 2019 to 2024, ASC savings was calculated as the difference between spending in HOPDs and ASCs. For each site of service, total spending was calculated by multiplying the volume of procedures by their average payment amounts. Average payment amounts are calculated as the average, real claims paid amount per Healthcare Common Procedure Coding System code, which best accounts for the complexity of the Medicare ASC and HOPD payment systems (particularly, differences in bundled payment structures).
Future Savings
The projection of future ASC savings incorporated assumptions regarding the growth of outpatient surgical volume per enrollee, MA penetration rates and the ASC share of outpatient surgeries. The number of beneficiaries covered by traditional Medicare was estimated using county-level data from the US Census Bureau and MA penetration growth rate data from CMS. Estimates were calibrated and adjusted to align with data from the Medicare Trustees.
Using 2024 outpatient volume as a baseline, KNG Health applied HCPCS-level annual growth rates to project future outpatient volume and ASC share. The baseline outpatient volume per enrollee was stratified by age, gender and race to match population projections. Payment rates for future years were calculated using 2024 Medicare payments as a baseline, taking into account recent changes in regulatory policy regarding inflationary update factors. For each procedure, the estimated savings is the difference between the projected HOPD and ASC payments.