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Private payers also pay a lot more for HOPD vs ASC care

A new study finds private payers, similar to Medicare, pay significantly higher rates to HOPDs for common services, although a narrow network led to savings for one national payer.

Jacqueline LaPointe
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Published: 15 Oct 2025

Medicare isn't the only payer facing excessive costs due to care delivered in hospital outpatient departments, or HOPDs, where it can be safely provided in the ambulatory setting. Private payers are also paying significantly more, according to a new study in Health Affairs.

Outpatient reimbursement rates to HOPDs are generally much higher for services that can also be performed in ambulatory settings, such as ambulatory surgical centers (ASCs). This payment differential has led to significant growth in outpatient Medicare spending, especially as hospitals acquire or build more outpatient departments.

Site-neutral payment policy aims to curb spending by reducing reimbursement rates to align with Physician Fee Schedule rates for services that can be performed in either setting. These lower rates could save Medicare about $150 billion over a decade, recent estimates have shown.

But private payers could also benefit from expanding site-neutral payment policies -- to the tune of about $1.4 billion a year, the Health Affairs study found.

The high price of HOPD care

The study of three national payers -- UnitedHealthcare, Cigna and BlueCross BlueShield -- revealed significant variation in commercial rates paid for 13 common procedures performed across HOPDs and ASCs. The procedures included knee surgery, colonoscopy and biopsy, radiofrequency ablation and facet joint injection.

Using Transparency in Coverage data, researchers from Brown University found that commercial prices were, on average, $1,489, or 78%, higher in HOPDs than in ASCs in 2024.

This absolute difference in prices by setting was significantly higher than that observed in the Medicare program by about $1,000, reflecting higher overall rates paid by private payers relative to Medicare.

While all three national private payers paid more for HOPD versus ASC care, the amount paid varied significantly.

Cigna had the lowest payment differentials between HOPDs and ASCs, at an average of $327, whereas United had the highest at $1,673. Cigna also had the lowest prices across HOPDs, although the payer paid slightly higher rates to ASCs for the procedures compared to United and BlueCross BlueShield.

Researchers estimated that approximately $1.4 billion in annual savings would be realized if United and BlueCross BlueShield paid Cigna's average HOPD rates for the procedures analyzed in the study.

How Cigna saved on HOPD spending

Researchers attributed Cigna's lower payment differential to the payer's provider selection strategy.

The study revealed that Cigna had significantly narrower networks of lower-priced HOPDs, contracting with only 14% of HOPDs in applicable markets. In contrast, United and BlueCross BlueShield contracted with an average of 76%.

"[G]iven current HOPD and ASC markets, it is possible for insurers to selectively contract with lower-price providers, reduce spending, and continue to meet the needs of members," researchers wrote in the study.

Private payers have more flexibility and choice compared to Medicare to create narrow networks of lower-priced HOPDs to reduce spending and payment differentials across settings.

In contrast, the Medicare program has used policy and regulations to adopt and implement site-neutral payments that align outpatient rates for HOPD care with the prices paid to ASCs for the same service. Although site-neutrality has recently come under scrutiny as hospital groups argue that the differential is justified because HOPDs handle more complex cases.

However, if this is the case, then the study raises the question: Why aren't major payers, such as UnitedHealthcare and BlueCross BlueShield, utilizing narrow networks to save money?

The problem with narrow networks

Crafting provider networks is a tricky business for payers. Private payers must consider the preferences of their employer groups, even when those preferences don't align with efforts to cut costs.

"If employer groups value broad networks -- potentially to meet the needs of large, multi-market firms -- insurers will construct networks in accordance with these preferences, despite higher costs," researchers wrote in the study.

Broad provider networks offer employees flexibility and a wide range of options for healthcare providers. As a result, broad networks tend to be popular among employer groups because they satisfy workers, who tend to prioritize keeping their current providers in-network. However, research indicates that these networks can lead to higher premium costs due to the increased number of providers and the potential for higher prices.

Additionally, provider networks in some markets may hold greater control. At the same time, patients may exert pressure on private payers to maintain broad networks, thereby accepting higher prices at their sites of care, researchers explained.

Achieving savings through site-neutral payments or, at the very least, through smaller payment differentials between HOPDs and ASCs may prove challenging, they stated.

"Although regulators can more easily equalize prices across sites in the Medicare space, achieving the potential savings inherent in site neutrality in the commercial space will require more nuanced approaches that account for competitive market dynamics in both the insurer and provider spaces, as well as access for patients to real-time knowledge combined with financial incentives," the study concluded.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016. 

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