Two Pennsylvania Insurers Steer Patients to ASCs, and Several State Laws Could Accelerate ASC Development

Two nonprofit insurers in Pennsylvania have begun directing patients toward ambulatory surgery centers (ASCs) for certain elective procedures: Pittsburgh-based Highmark on January 1, and Philadelphia-based Independence Blue Cross (IBX) on June 1.

Highmark, whose health plan covers 7 million members across the mid-Atlantic, says its new policy only considers certain low-risk outpatient surgeries medically necessary when performed in the lowest-cost appropriate setting, like an ASC. The policy does make exceptions for factors like patient age, medical history, or location.

IBX covers more than 3 million members in southeastern Pennsylvania, southern New Jersey, and Delaware, and its policy adds a site-of-care review during prior authorization for select elective surgeries.

Health system reactions diverge: some systems willingly adapt to policy change.

IBX COO Richard Snyder, MD, shared that one CEO welcomed the policy, noting that ASCs are more efficient and have lower fixed costs than hospital outpatient departments (HOPDs). The CEO even acknowledged: "I lose money on every patient that we operate [on] in the hospital outpatient setting."

In Highmark's markets, some health systems have decided to accept ASC-level reimbursement at their HOPDs, according to Highmark Health Plan CFO Kate Musler, because losing volumes to nonaffiliated ASCs was too much of a concern.

Other health systems push back, citing worries over finances and patient care.

Synder reported another CEO said investing in ASCs was against his organization's financial interest, since the same procedure pays more in the HOPD.

In Philadelphia, Jefferson Health has taken their disagreement further by suing IBX, claiming the policy has cost Jefferson more than $35 million. They argue the policy fails to account for the reasons some procedures should not be performed in ASCs and could delay care.

Despite opposition from some hospital leaders, Snyder doesn't expect IBX to roll back patient steerage to ASCs: "Over time, I would expect that we will tighten that policy."

Changes to state laws also have the potential to accelerate ASC shift.

While payer policy can push site-of-care shifts in a market, so can local regulations. For example, certificate-of-need (CON) laws require state approval before certain facilities (like ASCs) or services can be built, and are in force in 35 states and Washington, D.C.

Originally intended to reduce healthcare costs by slowing unnecessary or duplicative construction in a market, some states continue to reduce their ASC-related CON laws to support competition and increase access to care.

Tennessee recently passed legislation that eliminates CON requirements for ASCs licensed on or after Dec. 1, 2027. In March, Maine passed a law to exempt most ASCs from CON review and raised the capital expenditure threshold that triggers review. North Carolina has also introduced a bill that would relax ASC CON requirements statewide.

These repeals can directly impact ASC growth. Researchers from George Mason University and Utah State University found that state CON law repeals increase ASCs per capita by 44-47% statewide, which can facilitate increased site-of-care shift.

So What?

• A national ASC shift figure is a useful starting place, but insurer policy and state CON laws are among several key forces setting the pace of ASC migration in a market.

• Reimbursement is usually lower for a procedure performed in an ASC compared to the HOPD. Continued shifts to the ASC have direct impacts on health system finances, and leaders can have vastly different reactions to the shift in their market.