Publication|Articles|October 6, 2025

The American Journal of Managed Care

  • October 2025
  • Volume 31
  • Issue 10

Pricing and Insurance Networks in Outpatient Surgery Markets

Key Takeaways

This article examines how prices, insurer payments, and patient payments for outpatient surgeries differ by site of care and network status.

ABSTRACT

Objective: To examine how site of care and insurance network contribute to price differences for common adult outpatient surgeries paid by commercial insurers.

Study Design: Observational study using a 50-state sample of commercial medical claims data.

Methods: We compared insurer-paid amounts, patient out-of-pocket payments, and balance billing amounts for 4 common adult outpatient surgeries (arthroscopy, cataract, colonoscopy, and upper gastrointestinal procedures) by site of care (ambulatory surgery center [ASC] vs hospital outpatient department [HOPD]) and insurance network status (in network vs out of network).

Results: Compared with a surgery occurring at an in-network ASC, insurers paid $306 (32%) more to an out-of-network ASC, $1042 (110%) more to an in-network HOPD, and $1041 (110%) more to an out-of-network HOPD. Patients paid $186 more out of pocket at an in-network HOPD than at an in-network ASC, which both had cost-sharing rates lower than out-of-network facilities.

Conclusions: Patients saved money by choosing in-network facilities regardless of the site of care, whereas insurers saved by increasing the usage of ASCs for common adult outpatient surgeries paid by commercial insurers. Insurance models that better align patient and insurer incentives could increase utilization of ASCs and lower overall spending on outpatient surgeries.

Am J Manag Care. 2025;31(10):In Press

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Takeaway Points

We examined how prices, insurer payment, and patient payment for outpatient surgeries differ by site of care and network status.

  • Prices are lower at both in-network and out-of-network ambulatory surgery centers (ASCs) than at hospital outpatient departments (HOPDs).
  • Patients pay significantly less at in-network facilities than out-of-network facilities, whereas insurers pay significantly less at ASCs than at HOPDs.
  • Insurers and payers could further reduce medical costs by better aligning patient and insurer incentives and increasing the utilization of ASCs.

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Outpatient surgery is a large and growing market in the US. From 2017 to 2021, commercially insured per-person spending on outpatient facilities increased by 19%.1 Spending on outpatient procedures is expected to continue to grow, as CMS has removed more procedures from Medicare’s inpatient-only list in recent years.2

Outpatient surgeries largely occur in hospital outpatient departments (HOPDs) and ambulatory surgery centers (ASCs). As a direct competitor to HOPDs, ASCs provide health services at a lower price. Commercial prices at HOPDs are often more than 50% higher than at ASCs.3 The large price difference is driven by the difference in facility fees across settings.

Previous studies found that performing more cases at ASCs rather than HOPDs led to lower medical spending without quality deterioration and with improved consumer welfare.3-7 As a result, many employers and health plans, such as those offered by the California Public Employees’ Retirement System (CalPERS), have developed steerage programs for ASCs. A limitation of these programs is that they may leave some providers out of their networks, potentially exposing patients to high costs. Provider networks are used by insurers to encourage their members to obtain care from specific clinicians and facilities in their network by covering a known share of the price. In the same setting, prices are lower for in-network facilities than for out-of-network (OON) facilities. Nevertheless, it is unknown whether the settings of care or the network status contribute more to the prices and payments of insurers and patients.

We conducted a claim-level analysis to examine how these 2 factors, site of care and insurance network, contribute to price differences for common adult outpatient surgeries for commercial insurers and patients. Results from this study provide a more detailed picture of how insurers use the 2 instruments to lower costs.

METHODS

Data and Sample

We used data obtained for round 4 of RAND’s Hospital Price Transparency Study, which included claims for a commercially insured population in 50 states in 2018 and 2019. These data combined claims obtained from self-insured employers and 11 state all-payer claims databases. These data have negotiated prices, payments, and charges for each claim. More details about these data were published elsewhere.8

We restricted our sample to 4 procedure groups that are commonly performed at ASCs—arthroscopy, cataract, colonoscopy, and upper gastrointestinal procedures—for patients aged 19 to 64 years. In our data, those 4 procedure groups covered more than 80% of claims at ASCs. We identified procedures by Current Procedural Terminology codes and followed the Clinical Classifications Software for Services and Procedures9 to create the 4 procedure groups. As the professional fees are set to be identical at ASCs and HOPDs, we focused on facility claims, as others have done.10 eAppendix Table 1 (eAppendix available at ajmc.com) provides codes used to identify procedures and site of care for this study. Our analytic sample included 198,975 procedures done at ASCs and 26,646 procedures at HOPDs.

Variables

We examined 5 dependent variables: charge, price, insurer payment amount, patient out-of-pocket (OOP) payment amount, and balance billing amount. The charge is the amount that the facility asks for, which is usually higher than the price and may not be fully paid. The price, or allowed amount, is the amount that an insurance plan allows to be paid to the facility for the surgery. The insurer-paid amount and OOP payment amount are those paid by the insurer and the patient, respectively, for the surgery. The balance billing amount is the difference between the amount charged by the facility and the price for surgeries performed at OON facilities. This was assigned zero for in-network facilities.

The key exposure variables were site of care (ASC vs HOPD), obtained from the place of service variable, and network status (OON vs in network), obtained from the in-network indicator in the claims data. As specified in the next section, our analysis also controlled for patient characteristics, year of service, procedure groups, and health service area (HSA)—constructed based on the facilities’ zip codes.

Analytic Approach

We started with a descriptive comparison, comparing unadjusted statistics across network status and site of care. We then used multivariate regression to estimate the correlation among each outcome and network and site of care, regressing the dependent variables on provider network status (in network or OON) and site of care (ASC or HOPD). We controlled for patient characteristics (age and sex) and a set of fixed effects. We used year fixed effects to account for changes over time that are constant across individuals. To control the market-level time-invariant changes, we included market fixed effects, defined by HSAs.

We also included procedure group (ie, arthroscopy, cataract, colonoscopy, and upper gastrointestinal) fixed effects to absorb price differences across procedures. Procedures within each procedure group are different in terms of acuity, which is correlated with price and payments. To address this, we conducted sensitivity tests, stratifying the regressions by the 4 procedure groups. This by-group analysis also allows patient preferences and market dynamics to differ across the 4 groups of procedures. For the by-group analysis, we used individual procedure code fixed effects instead of procedure group fixed effects.

RESULTS

The Table shows the summary statistics of the analytic sample, stratified by network status and site of care. A comparison across the 4 groups suggests that in-network ASCs provided procedures with the lowest price, whereas OON HOPDs had the highest price and payments. Although prices at OON ASCs were higher than those at in-network ASCs, they were still lower than those at in-network HOPDs. This pattern was consistent for patient OOP amount and insurer payment amount. OON ASCs charged slightly higher prices than in-network HOPDs.

The Figure presents the regression-adjusted estimated differences, with SEs, in price and payments between different settings. The corresponding regression results are in eAppendix Table 2. Prices were significantly higher for procedures performed at OON ASCs and in-network HOPDs than those performed at in-network ASCs: $886 (79%) and $1227 (109%) higher, respectively. Procedures at OON HOPDs had even higher prices: $1576 (140%) higher than that at in-network ASCs.

For charges, in-network HOPDs charged $1194 (37%) more than in-network ASCs. OON facilities charged significantly more than in-network facilities. OON ASCs and HOPDs charged $2385 (73%) and $3540 (108%) more than in-network ASCs, respectively.

When disentangling the paid amount into the OOP amount paid by a patient and the amount the insurer paid, we found that a patient saved by choosing an in-network facility, regardless of the site of care, whereas insurers saved by increasing use of ASCs. From the patient’s perspective, an in-network ASC was the most affordable choice, and an in-network HOPD was the next least costly choice, at $186 (103%) more on average. If the facility was OON, a patient’s OOP payment would be much higher compared with in-network facilities, regardless of site of care (311% and 287% higher at OON ASCs and OON HOPDs, respectively). However, an insurer would pay significantly less for a surgery furnished in an ASC than in an HOPD, and the network status contributed very little. Compared with an in-network ASC, an insurer paid $306 (32%) more to an OON ASC, $1042 (110%) more to an in-network HOPD, and $1041 (110%) more to an OON HOPD. There was no significant difference in the balance billing amount between surgeries performed at OON ASCs and those at OON HOPDs.

Results were robust when we stratified our analysis by procedure group. As shown in eAppendix Table 3, the differences in payments and charges varied across different procedure groups, but the relative order remained the same: Prices were the lowest at in-network ASCs, followed by in-network HOPDs and OON ASCs, and they were the highest at OON HOPDs. Insurers paid significantly less for surgeries at ASCs than HOPDs, whereas patients paid significantly less for in-network facilities than for OON facilities.

DISCUSSION

Prices for outpatient surgeries are driven by the care setting and provider network. Using a national sample of commercial insurance claims, we examined price differences for common adult outpatient surgeries by site of care (ASC and HOPD) and network status for insurers, patients, and overall health care spending. Consistent with prior research,3 we observed that prices were lower at ASCs than at HOPDs and lower at in-network facilities than at OON facilities. Novel to this article, when combining network with site of care, we found lower prices for OON ASCs than for in-network HOPDs. This difference underlies the important role that site of care plays in reducing medical spending.

Several employers and purchasers have designed networks and benefits to direct patients to lower-priced settings. Most notably, motivated by differences in site-of-care prices, CalPERS implemented a reference pricing model, in which eligible patients who receive care in a HOPD are responsible for paying the difference in price between the HOPD facility fee and the lower-priced ASC. Evaluations of this program found financial savings similar to our findings, with no meaningful change in complication rates.11 Other examples include the Massachusetts Group Insurance Commission and the Minnesota State Employee Group Insurance Program, which both use tiered networks to direct patients to lower-priced providers.12,13 Related programs use financial rewards to incentivize the use of lower-priced providers.14 These types of programs inform patients of provider price variation and use financial incentives to direct patients to lower-priced providers.

Insurers have restricted networks to encourage patients to utilize lower-cost providers. Our findings confirmed that patients paid significantly less at in-network facilities than at OON facilities. If professional fees, which are usually higher when physicians are OON, were included, the difference between OON and in-network payments would be even larger. States and the federal government have taken steps to limit patients’ receipt of surprise medical bills (ie, unexpected bills for emergency care or nonemergency care provided by an OON professional at an in-network facility). However, these policies typically focus on OON clinicians and unplanned procedures and do not address scheduled procedures occurring at OON facilities.15,16

Other recent efforts by public insurers have sought to equalize payments across sites of care, which reduces incentives for patients to seek out lower-cost options.11,17 Our findings suggest that insurers and plan sponsors can reduce health care spending by increasing incentives for patients to obtain care in ASCs rather than HOPDs. If insurers pass part of the savings from using ASCs on to patients, patients will be better incentivized to use ASCs. Meanwhile, insurers and plan sponsors, especially self-insured employers, could also benefit from the increased use of ASCs. Reductions in provider payments should be reflected in lower premium payments, which are paid out of worker wages.18 Cost containment is also important for insurers, as lower prices and premiums could attract more enrollees.

By combining the 2 cost-reduction instruments properly, insurers and plan sponsors could further reduce medical spending. The most straightforward strategy is to include more ASCs in their provider networks and lower patients’ cost share for ASCs. Therefore, patients will have a higher willingness to go to the lowest-cost option: in-network ASCs.

Limitations

This study is not without limitations. First, we examined the commercially insured population using a convenience sample. Although the pricing strategies are known to be the same, the magnitude of price difference could vary for different populations. Second, these data lack information about benefit design, which limits our ability to explore how our findings vary across plans with different levels of patient cost sharing. Third, although we controlled for patient age, gender, and a set of fixed-effect regression controls, there could be other confounders that need to be teased out before drawing a causal conclusion. Finally, our balance billing amounts may estimate an upper bound of what a patient actually pays because physicians often recover only approximately 50% to 60% of the total of a surprise bill.19 Future research could delve deeper into these research questions, exploring the influence of local market dynamics and identifying optimal levels of patient cost sharing.

CONCLUSIONS

In this study of common adult outpatient surgeries paid by commercial insurers, we found that patients saved money by choosing in-network facilities and insurers saved by increasing the usage of ASCs. Insurance models that better align patient and plan sponsor incentives could lead to greater utilization of ASCs and lower overall spending on outpatient surgeries. 

Author Affiliations: RAND Corporation, Santa Monica, CA (XZ), and Arlington, VA (AMK); Brown University (CMW), Providence, RI; University of Louisville (ELM), Louisville, KY; University of North Carolina at Chapel Hill (JYL), Chapel Hill, NC.

Source of Funding: Funding from the Agency for Healthcare Research and Quality (grant R01HS027994) supported this study. The Agency for Healthcare Research and Quality had no role in the design or conduct of the study.

Author Disclosures: Dr Whaley has received grant funding from Arnold Ventures, Commonwealth Fund, National Institute on Aging, Patient Rights Advocate, and Robert Wood Johnson Foundation. The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (XZ, CMW, ELM, JYL, AMK); acquisition of data (CMW); analysis and interpretation of data (XZ, CMW, ELM, AMK); drafting of the manuscript (XZ, JYL); critical revision of the manuscript for important intellectual content (CMW, ELM, JYL, AMK); statistical analysis (XZ, CMW); provision of patients or study materials (CMW); obtaining funding (CMW, AMK); and administrative, technical, or logistic support (CMW).

Address Correspondence to: Xiaoxi Zhao, PhD, RAND Corporation, 1776 Main St, Santa Monica, CA 90401. Email: xzhao@rand.org.

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13. Prager E, Curto VE, Magyari A, Gaye M, Sinaiko AD. Tiered physician network plans and patient choices of specialist physicians. JAMA Netw Open. 2023;6(11):e2341836. doi:10.1001/jamanetworkopen.2023.41836

14. Whaley CM, Vu L, Sood N, Chernew ME, Metcalfe L, Mehrotra A. Paying patients to switch: impact of a rewards program on choice of providers, prices, and utilization. Health Aff (Millwood). 2019;38(3):440-447. doi:10.1377/hlthaff.2018.05068

15. Overview of rules & fact sheets. CMS. Accessed September 3, 2024. https://www.cms.gov/nosurprises/policies-and-resources/overview-of-rules-fact-sheets

16. Hoadley J, Lucia K, Kona M. State efforts to protect consumers from balance billing. Commonwealth Fund. January 18, 2019. Accessed September 3, 2024. https://www.commonwealthfund.org/blog/2019/state-efforts-protect-consumers-balance-billing

17. Levinson Z, Neuman T, Hulver S. Five things to know about Medicare site-neutral payment reforms. KFF. June 14, 2024. Accessed January 7, 2025. https://www.kff.org/medicare/issue-brief/five-things-to-know-about-medicare-site-neutral-payment-reforms/

18. Arnold D, Whaley C. Who pays for health care costs? the effects of health care prices on wages. RAND. July 28, 2020. Accessed December 19, 2024. https://www.rand.org/pubs/working_papers/WRA621-2.html

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