5 Crucial Points on Moving Out-of-Network as an ASC
John Bartos, JD, CEO of Collect Rx, discusses five considerations to moving out-of-network as a surgery center. "Our view is that a hybrid out-of-network/in-network strategy, taking reimbursement levels into account on a payor-by-payor basis, puts ASCs in the best position to maximize overall revenue," Mr. Bartos says.
1. Compare out-of-network and in-network reimbursement. The key to determining whether to go out-of-network with a given payor is to compare the reimbursement levels currently experienced under the in-network contract with the projected reimbursement levels if the ASC goes out-of-network with that payor, according to Mr. Bartos. He says to make the comparison the provider needs to carry out the following calculation in both scenarios:
Number of cases X average reimbursement levels per case = total reimbursement
This requires the provider to have four pieces of information:
1. In-network number of cases
2. In-network average reimbursement levels per case
3. Out-of-network number of cases
4. Out-of-network average reimbursement levels per case
Presumably the provider in this situation is in-network, so the provider's experience with the payor answers the first two questions. The more difficult matter is obtaining the data on out-of-network volume and reimbursement. "This requires understanding of what is happening in the local marketplace, factors such as local payor and employer mix and the provider's relative market share as compared to other providers in the area," he says. "If a provider needs help with this kind of analysis, we recommend hiring a consultant."
2. Volume may not drop as expected. Mr. Bartos says he commonly hears providers express concern that they will lose patient volume by going out-of-network, but this is typically not the case. "The guiding principle of why payors enter into managed care contracts is a 'volume discount' approach. In other words, the payor drives patients to the ASC and, in return, the ASC accepts lower reimbursements," he says. However, he says while payors play a significant role in steering patients to hospitals and physician practices, the same is not true of ASCs.
"It's a little different for ASCs because they get their patients from physician referrals and not from payors," he says. "Moreover, we've seen that patients want access to the value that ASCs offer, such as higher service and quality, personalized care and state-of-the art equipment," he says. As a result, going out-of-network often does not significantly impact patient volume.
3. Staff must be committed to negotiating bills and appealing claims. Many large payors continue to make payments on out-of-network bills that are substantially greater than in-network reimbursements if the provider is effective at handling these bills, according to Mr. Bartos.
If you're going to pursue an out-of-network strategy, however, you must have staff dedicated to negotiating settlements on individual bills and effectively appealing claims, Mr. Bartos says. If you don't have adequate staff, you could leave money on the table.
"To be successful with out-of-network bills, the provider needs to commit resources and staff to engage in an ongoing, proactive interaction with the out-of-network payor on these reimbursements," he says. "The provider's staff needs to have the requisite expertise and supporting data to be effective in … negotiating individual bills and following a thorough, rigorous appeals process." He says when providers can dedicate the staff to doing this — or utilize the services of outside vendors that specialize in out-of-network bills — his company has seen out-of-network reimbursements that are significantly greater than in-network reimbursements.
4. Start with a small payor. Mr. Bartos advises his clients to start with a small payor and expand the out-of-network strategy gradually over time. "If a client is not experienced in dealing with out-of-network bills, we tell the client to start by going out-of-network with one payor that represents a smaller piece of their revenue," he says. "In this way, the provider can 'dip its toes' in the water, so to speak, to determine whether they're able to take advantage of the opportunity to get higher reimbursement on out-of-network bills."
He also recommends analyzing reimbursement levels on a payor-by-payor basis; don't just go out-of-network with every payor without considering whether each one is appropriate. He says starting with a single payor will give the ASC an idea of how much extra staff time is needed to handle out-of-network bills, as well as how the reimbursement differs from in-network contracts.
5. The Affordable Care Act makes it easier to appeal claims. The Patient Protection and Affordable Care Act, passed by the Obama administration in March 2010, makes it easier to appeal claims and pursue an out-of-network strategy with payors, Mr. Bartos says. He says many administrators do not realize the legislative and regulatory trends that favor providers going out-of-network.
"The ACA requires payors to have much stricter and more defined appeals processes, notify their insureds of such processes and ensure that their appeals processes follow certain standards," he says. "These requirements make it easier for providers to appeal out-of-network under-payments and denials."
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