Hospital outpatient vs ASC: the site-of-service gap in dollars for four procedures

The gap, procedure by procedure

Medicare pays for the same outpatient procedure under two different systems, depending on where it happens: the hospital outpatient prospective payment system in a hospital outpatient department, and the ambulatory surgical center (ASC) payment system in an ASC. For common procedures the hospital rate is about double.

Where the gap comes from

• Different conversion factors and weights. For 2026 the hospital outpatient conversion factor is $91.415 and the ASC conversion factor is $56.322, for facilities that meet their quality reporting requirements. (For 2026 CMS also takes 0.5% off the hospital outpatient conversion factor for non-drug services, the 340B remedy offset, at every hospital paid under the outpatient system except those that enrolled in Medicare after January 1, 2018. NewYork-Presbyterian is subject to it, so its actual 2026 outpatient rates are about 0.5% lower than shown: each non-drug payment is multiplied by 0.9951, so the colonoscopy’s $1,493.75 becomes $1,486.43, as the outpatient claim pricer shows.) ASC relative weights are scaled separately, and the result is that for these four procedures the national ASC rate is 49% to 54% of the hospital outpatient national rate.
• Different wage adjustment. 60% of a hospital outpatient rate is adjusted for local wages, against 50% of an ASC rate. In a high-wage market that widens the gap a little: at a wage index of 1.3697, the hospital rate rises 22.2% and the ASC rate 18.5%.
• Different packaging. In the hospital setting, cataract surgery and knee arthroscopy are comprehensive APCs (status J1): one payment covers most other hospital services on the claim. Colonoscopy and upper endoscopy are status T procedures, paid at half rate when billed with another, higher-paying status T procedure. Comparing one line from each setting is a fair first look; comparing whole claims is the fair second look.

What the patient pays

In both settings Medicare’s patient share is about 20% of the allowed amount, so a lower rate also means a smaller bill for the patient. For knee arthroscopy at this hospital the engine shows $816.88 in the hospital outpatient department and $389.78 at an ASC. In the hospital setting, the copayment for a single procedure cannot exceed the inpatient deductible ($1,736 in 2026). A colonoscopy that begins as a screening has its own, lower coinsurance rules, so the 20% figure does not apply to that case.

What it means for a payer

• Percent-of-Medicare contracts inherit the gap. At 150% of Medicare, knee arthroscopy at this hospital is $6,126.59 in the outpatient department (before the 0.5% offset) and $2,923.38 at an ASC (see how a percent of Medicare is computed).
• The gap varies by market. Because the two settings adjust for wages differently, run the comparison with each facility’s own wage index rather than a national average.
• Not every patient is a candidate. Site-of-service decisions turn on the patient’s clinical risk and the procedure, not only the rate.
• The rates change during the year too. Hospital outpatient and ASC rates are set by calendar year, and each line prices at the rates for the year of its own date of service. CMS republishes the tables each quarter, mostly for drugs and new codes. The cmswebpricer.com engine prices every 2026 facility line on one release of the 2026 tables, now the October 2026 release of Addendum B (the ASC side is the July 2026 Addendum AA). The October update changed mostly drug rates and new codes; the four procedures here price the same in both releases. Calendar year 2027 rates apply to services from January 1, 2027; repeat the comparison then (see which year’s rates apply).