Medicare Advantage now covers more than half of all Medicare beneficiaries, and it is built around financial incentives to reduce costs, but it uses ASCs at virtually the same rate as traditional fee-for-service Medicare.
That finding, drawn from a KNG Health report commissioned by the Ambulatory Surgery Center Association, is one of the more counterintuitive data points in recent ASC policy research — and one of the most consequential.
In 2023, 31.3% of ASC-eligible procedures among MA beneficiaries were performed in ASCs, compared to 31.9% among FFS beneficiaries. In 2022, the figures were 31.6% and 31.7%, respectively. Across two years of data, two program structures with materially different financial incentives produced nearly identical site-of-care outcomes.
Why the gap should exist
The logic for MA plans to steer aggressively toward ASCs is clear. ASCs cost Medicare an average of 62% of hospital outpatient department rates for the same procedures. MA plans, which operate on fixed per-member payments from CMS, keep the difference when care is delivered more efficiently. Every procedure that moves from an HOPD to an ASC is a margin improvement for the plan.
MA enrollment has grown from 37% of Medicare beneficiaries in 2019 to 50% in 2024, a shift that now affects more than 33 million of the 67 million Americans covered by Medicare. The Medicare Hospital Insurance Trust Fund is projected to become insolvent in 2033. The financial pressure to find systemwide savings is not abstract.
Yet the utilization numbers show MA plans have not converted their structural incentives into meaningfully different behavior at the procedure level.
Where the data gets granular
The near-parity holds across most of the procedure categories where ASCs are most established. Eye and ocular procedures show 73.3% ASC share in MA versus 73.2% in FFS — essentially identical at the top of the utilization curve. Digestive procedures run 39.3% in MA versus 40.0% in FFS. Nervous system procedures show FFS actually running higher than MA, at 43.7% versus 40.1%.
Musculoskeletal and cardiovascular show MA modestly above FFS (19.8% versus 18.6% and 9.0% versus 8.5%, respectively) but the differences are within the margin of what would be expected from normal variation.
The more significant finding is that variation across procedure categories is larger than any difference between MA and FFS within them. The site-of-care decision appears to be driven more by procedure type and clinical convention than by which program is paying.
The age and dual-eligible nuance
ASC utilization is highest among beneficiaries aged 65 to 84 in both MA and FFS, with lower rates among those younger than 65 and those 85 and older. Differences between MA and FFS within age groups were generally within 1 percentage point.
Among dual-eligible beneficiaries, MA showed slightly higher ASC share than FFS by around 1 to 2 percentage points across most age groups, with the exception of those 85 and older where rates were nearly identical. Among non-dual beneficiaries younger than 65, ASC utilization was modestly lower in MA than FFS.
The opportunity the report flags explicitly
The KNG report identifies MA’s failure to differentiate from FFS as an area in which plans “could enhance value-based care initiatives” and notes that since ASC shares are similar across both cohorts, “there appears to be room for expanded utilization, where clinically appropriate and aligned with patient safety.”
The implication is if MA plans leveraged their structural incentives to shift even a fraction of the procedures currently performed in HOPDs into ASCs, the downstream savings to the program would be substantial. Given the projected insolvency timeline of the Trust Fund and the scale of MA enrollment, the cost of continued parity with FFS is compounding every year.
The data does not explain why MA plans have not converted their incentives into action. Network design, contracting barriers, clinical convention and patient preference could all be contributing factors. What the data does say is the gap between what MA plans are incentivized to do and what they are actually doing is real, measurable and growing more expensive with every passing enrollment year.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.