5 Observations on Handling Out-of-Network Reimbursement From Surgery Center Leaders
Out-of-network reimbursement is one of the most discussed issues in the ASC industry, as payors continue to pressure physicians to take cases to in-network centers. The strategy, which used to be a profit-driver in successful centers, is disappearing in some areas of the country — though experts say the demise is moving more slowly than expected. Here, four industry experts discuss the future of out-of-network, how and when to contract with payors, and how to ensure correct reimbursement with either strategy.
1. Go in-network when reduced case volume and total review outweigh OON profit. Rob Murphy, president of Murphy Healthcare Group, says surgery centers should consider moving in-network when reduced case volume and total revenue outweigh the benefits of high per-case revenue of out-of-network cases. Increasingly, payors are putting pressure on physicians to take cases to in-network surgery centers, meaning out-of-network centers may see their case volume decline if they opt for a purely OON strategy.
Mr. Murphy says going in-network can be profitable if the move generates a sufficient increase in volume to cancel out the lower revenue per case. To determine whether this is a good move, speak to physicians about the cases they take elsewhere because of the center's out-of-network status. Administrators should also determine whether the center and staff can handle an increase in volume, since the ASC may already be running at full capacity.
2. Be persistent when moving in-network. Mr. Murphy stresses that going in-network is only a good idea if the move increases the center's overall profit margin. In other words, when deciding whether to move in-network, make sure to negotiate profitable rates with payors to ensure your center can survive.
"Don't sign contracts that don't increase the overall profit margin," Mr. Murphy says. ASCs have an advantage in negotiations because their cases typically cost less than hospital cases, which saves payors money. ASC administrators can sell this advantage to the payor by pointing out the amount saved on a typical case at the ASC versus the hospital.
3. Hybrid out-of-network/in-network strategy is best to maximize revenue. John Bartos, CEO of Collect Rx, says many people in the ASC industry have the misconception that out-of-network is an "all or nothing" strategy. Instead, he says surgery centers can take advantage of a hybrid out-of-network/in-network strategy to maximize revenue. He says it is financially prudent for a surgery center to accept a portion of their revenue from out-of-network patients, since uncontracted rates are generally higher than those contracted with payors.
He says out-of-network should range from 20 to 25 percent of patient volume to up to 75 to 80 percent, depending on a number of factors. Those factors include local payor and employer mix, the comparable reimbursement levels for their most common procedures, and the relative market share of the ambulatory surgery center as compared to other providers.
4. Certain specialties work better with out-of-network. Mr. Bartos stresses that out-of-network is still a viable strategy and can work with all types of specialties in a surgery center. However, he says that because of the growth of patient responsibility in policies with out-of-network benefits, the facilities that will reap the greatest benefits are those in specialties with higher billed charges. These specialties include orthopedics, neurosurgery, spine and other similar high-dollar specialties. He adds that other specialties can benefit from the greater reimbursement from out-of-network bills as well, but the previously mentioned specialties are the sure winners.
5. Recognize data will vary on patient deductibles based on in-network status. Brice Voithofer and Bill Gilbert of AdvantEdge Healthcare Solutions emphasize that careful eligibility checks are essential to surgery centers pursuing a hybrid out-of-network/in-network strategy. They say eligibility checks will usually not only show co-pay, but also any co-insurance, and possibly even the patient's remaining deductible amount.
However, they emphasize that each plan is different, and the amount of data received will vary based on whether the surgery center is in-network or out-of-network. They recommend sending a confirmation tailored to the individual patient when confirming the appointment, rather than waiting until the day of the procedure to confirm all billing details.
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