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8 Key Thoughts for ASCs on Out-of-Network Services

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Being able to accept out-of-network patients is an issue ambulatory surgery centers can not ignore. Leveraging out-of-network reimbursements can be good for patients and profitable for center when it is done right. However accepting out-of-network patients can be difficult and full of pitfalls for the ill-prepared. Here are eight key thoughts on current and future out-of-network challenges and opportunities.

1. Out-of-network is still a necessary strategy consideration. Centers' efforts to focus on out of network patients declined over the last several years due to payors' increased efforts to clamp down on out of network providers. However, with the advent of the Patient Protection and Affordable Care Act, there are millions of Americans becoming insured on plans with out-of-network benefits. In addition, narrowing insurance networks mean many providers are left completely out-of-network, so out-of-network may be the only strategy for some ASCs. Finally, payors' declining reimbursements make it impossible for some providers to accept in-network patients and continue to remain in business, forcing them to consider an out-of-network strategies as a means of survival. In essence, a combination of increasing numbers of potential out-of-network patients and reduced payments mean out-of-network must be a part of a centers strategy.

2. Success of an out-of-network strategy depends on an ASC's position in the market. With few exceptions, in most geographies, it is financially prudent providers to have a portion of their revenue come from out-of-network patients. The local payer and employer mix, reimbursement levels both in- and out-of-network and a given ASC's market share are all considerations when deciding on an out-of-network strategy. Failure to consider one of these factors could result in significant losses to a center. "If providers are prudent in picking and choosing the payors with which they are out-of-network, they will maximize total revenue and profits," says John Bartos, CEO of Collect RX.

3. Out-of-network requires initial uncertainty and an intimate knowledge of cost structure. "[To understand ASC cost structure] you have to have at least an average for your procedures. That's where it starts," says Thomas J. Pliura, MD, JD. "Every provider has to know their fixed and variable overhead costs." This is vital to an ASC's understanding of how much it need to collect in reimbursements to be viable and how to leverage an out-of-network status to do so. Even with knowledge of cost structure, however, starting in out-of-network can be an uncertain process.

"One of the things an ASC has to be prepared for is not knowing in advance what a reimbursement will be on any given case. But there’s no question that the out-of-network reimbursements will be higher," says Mr. Bartos. "Basically, if you're going in-network, you're saying you'll accept lower reimbursements for more patients. But in out-of-network, over time you'll generate higher reimbursements because there isn't the volume discount."

4. Out-of-network charges must be justifiable. Because of the movement toward price transparency, it is crucial to be able to justify out-of-network charges. "It behooves providers to become aware of what the going rate [for a procedure] is in a geographic area. They need to be competitive for whatever that is; they don't want to be outliers. Be proactive and make sure your charges are supportable," Dr. Pliura says. Being able to justify charges by doing a small amount of market research helps ASCs remain a viable option for patients, he says: "Rarely will an ASC's charges be more than a hospital's."

5. To test out-of-network strategy, start small. Mr. Bartos suggests going out-of-network with an insurance company that represents a small portion of business. That way administrators can get an idea of if whether the team can handle out-of-network, what reimbursements look like, and whether the entire processes is feasible. If it doesn't work out, Mr. Bartos says, getting back in-network isn't impossible.

6. Education is vital to out-of-network success for both case volume and terms of billing. For patients, sticker shock can be overwhelming. It is in a provider's best interest to communicate the potential cost savings of treatment at an ASC, especially if a patient will be under-deductible for a procedure, no matter what. "In the event a patient is out-of-network, centers should communicate with patients how the insurance will work and what to do with any checks they receive from their insurer," according to Timothy Fry, JD, of McGuireWoods, who notes the burden of collecting co-pays will fall directly on ASCs.

7. To avoid liability, centers should follow a number of processes such as documenting benefits with payors upfront and providing a record of practices. According to Mr. Fry and Meggan Bushee, JD, also of McGuireWoods, the best way for ASCs to avoid problems with insurers is to inform them of the center's billing practices, including payment protocols, and carefully document these discussions. While waiving co-pays may attract patients, it brings with it legal risks that vary on a state-by-state basis and with what insurance companies require, according to Ms. Bushee.

8. The sentiment surrounding ASCs' rights to out-of-network reimbursement are constantly changing. The recent Illinois case in which the judge denied a motion for summary judgment on a claim brought against an ASC for waiving or reducing copayment fees may signal a sea change for legal precedents surrounding out-of-network reimbursements. While there is not yet a final judgment, the case has not been thrown out and may go to trial this year. "The judge denying the motion for summary judgment indicates that waiving co-pays is not per se insurance fraud in the opinion of the federal court," says Ms. Bushee. "It's likely viewed as a gray area by the court, which is why they are going to take a closer look at the law and practices."

More Stories on Coding & Billing:
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