Ambulatory surgery centers (ASCs) in Indiana could face a major reimbursement shift if new state legislation mandating site-neutral payments passes.
In a recent Ambulatory Surgery Center Association (ASCA) audio update, Charlie Leonard, a member of ASCA’s public affairs team, spoke with ASCA Director of Government Affairs Stephen Abresch about Indiana House Bill (HB) 1003. The bill proposes to reimburse certain surgical procedures at physician office rates, regardless of whether they are performed in a hospital outpatient department (HOPD), an ASC or a physician office.
“From ASCA’s standpoint today, we believe this proposal would have devastating consequences for ambulatory surgery centers and the patients they care for in Indiana,” Leonard said.
Currently, HB 1003 states that state employee health plans, commercial insurance plans, Medicaid and HMOs would all reimburse at physician office rates for equivalent outpatient services.
Indiana is not the only state eyeing site-neutral payment policies. Similar ideas are surfacing in New York and Texas, with federal discussions also underway in Congress.
In November, senators proposed a bipartisan framework to reform Medicare payments by establishing site-neutral rates to standardize reimbursements. The proposal followed a 2.9% Medicare payment increase for ASCs in 2025 from Centers for Medicare & Medicaid Services (CMS).
The driving idea behind the Indiana bill is to lower health care costs for residents by making all outpatient procedures reimbursable at the same rate as services performed in a physician’s office. The site-neutral concept is part of Governor Mike Braun’s broader health care plan, which initially focused on requiring nonprofit hospital systems to negotiate site-neutral prices with Medicaid and commercial insurance.
Yet the language in HB 1003 offers little clarity regarding which specific procedures would be included, Abresch said.
“We don’t have definitions for any of the key terms here, like ‘health care service’ or ‘equivalent outpatient service,’” he said. “The one and only focus of these provisions is cost, not quality. Not safety, but cost.”
Supporters of the bill say Indiana residents pay too much for health care and that pegging reimbursement to physician office rates could lower costs, Abresch said. However, the reimbursement cut for certain ASC procedures could be substantial.
For high-volume procedures such as cataract removal, Abresch said that ASCs would be reimbursed at less than half their current Medicare rate.
“We can’t be expected to do that service for less than half of what we’re being paid currently,” he said.
The bill does not tie reimbursements to clinical appropriateness or safety guidelines, nor does it incentivize physician offices to increase their capacity for higher-acuity procedures, Abresch added.
“99.9% of volume for this procedure occurred outside the physician office,” he said of total hip arthroplasties in Medicare data. “We truly believe that there are some codes that could be fully orphaned from any outpatient surgical setting under this proposal.”
By cutting ASC reimbursement rates down to physician office levels without offering any additional incentives for physician offices to accept higher-volume or more complex procedures, the legislation would likely push many procedures out of ASCs, Abresch said.
“So you’ve got this dynamic where ASCs aren’t being reimbursed enough to take these procedures, and as we see for Medicare, there are vanishingly few physician office settings that offer the service,” he said.
Abresch also questioned whether physician offices have enough capacity to handle a large influx of procedures previously performed in ASCs.
“We’re skeptical, to boot, that state officials have a clear view of physician offices setting surgical capacity,” he said. “Indiana does have requirements on the books for office based settings.”
The bill is currently under review in the Indiana state legislature.
