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10 Critical Factors to Consider When Moving from Out-of-Network to In Network With Payers

Written by I. Naya Kehayes, MPH, Managing Principal and Founder, Eveia Health Consulting & Management | October 22, 2013

Out-of-network reimbursement continues to decline amongst most commercial and managed care payers due to ongoing efforts to reduce premiums to employers, acceptance of employers of reduced out-of-network benefits for their employees and the need to control healthcare cost. Moving from out-of-network to in network with any payer has many implications which must be considered that will ultimately impact the financial performance of your ambulatory surgery center. The following are 10 steps to follow to better assess the potential impact of moving in network with a payer.

1. Trend out-of-network volume by payer to determine if your access to patients is diminishing.

2. Assess the changes in net revenue over time as an out-of-network provider to determine if out of network reimbursement is increasing or decreasing.

3. Identify expected in network new volume by CPT code so you can understand the impact of volume on future revenue.

4. Evaluate if your ASC will have access to new insurance products offered by the payer, an in network provider that you do not have current access to, such as Medicare, healthcare exchange plans or HMO products, and quantify the volume that can be expected from these new products.

5. Forecast the impact on cost by moving in network; account for the incremental cost of performing new cases, the reduction on fixed cost per case by adding new volume and the potential impact on EBITDA.

6. Model the payer's contract rate offer and methodology and determine the net revenue value of the proposal based upon current volume vs. future volume expected to compare to current out-of-network revenue.

7. Confirm if your anesthesia group is in network with the payer. If not, you may need to identify an in network anesthesia provider which may be required for the ASC to pass payer credentialing and avoid the potential for rate reductions.

8. Query your medical staff to determine if any are out-of-network; review contract language that may require the ASC to assist the payer with their efforts to obtain a contract with out of network surgeons that are on medical staff at the ASC.

9. Quantify the savings you may generate for the payer by moving in network which can support your proposal if seeking higher reimbursements in contract negotiations.

10. Ensure the contract is economically viable before moving in network; you will not make it up on volume if the contract value results in a loss compared to your cost.

I. Naya Kehayes is the managing principal and founder of Eveia Health Consulting & Management. Eveia works with clients nationally providing services in the areas of payer contract evaluation, out-of-network analysis, payer negotiations,  ASC contract integration with health systems, operations management consulting and mock surveys. 

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