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Can the ASC Industry Still Effectively Wield Out-of-Network Strategy?

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Out-of-network volume has been a significant ambulatory surgery center strategy, but many in the industry now wonder if it still has a place in the business. Suzanne Webb, ASC Billing Division Vice President of Operations at MediGain, gives a snapshot of what the market looks like for OON ASCs and how that tactic remains a viable, and valued, option.

The market for OON ASCs today
Concern over OON focuses on whether there remains enough volume. "The well is drying up" has become a mantra in this matter, but Ms. Webb says that rising deductibles and co-pays — the root of patient financial burden — are an argument for the OON volume. In-network centers can only bill patients what is allowed by contract; deductibles and co-pays eat up the majority of the bill and patients have little to spend afterwards. ASCs may not be reimbursed enough to cover the cost of the procedure, let alone to make a profit.

New physician investment is another concern felt across the entire ASC industry. Will physician-owners think OON centers are too risky of an investment? "I am not finding this to be true," says Ms. Webb. "Savvy investors will look at the bottom line and I have seen OON centers that have been valued very highly."

Strategies for success
When structuring an OON strategy or simply analyzing ASC financials one of the most important issues to understand is amount billed versus revenue expectations. What should an ASC be making and what is it actually making? "You can't determine your profit margin if you don't know what your costs are," says Ms. Webb.

Set a baseline price for each procedure, the bare minimum needed to cover costs and include profit, and never dip below that threshold. "Insurance reimbursement should be a supplement to what your costs are," says Ms. Webb. Patients fear a high bill. A center's insurance verifier and patient financial counselor are star players in the OON game. Insurance verification will determine a patient's deductible and financial obligation. The patient counselor explains how OON benefits work to the patient.

Making OON work for your center is largely a matter of understanding your market and reaching the right people. Know the major payers and find the companies that offer OON benefits. "Market directly to those employers, rather than to the entire community," says Ms. Webb. "If you really cater to those businesses, you will find that your OON volume takes off."

Facing the narrow network
Narrow networks have not yet become the norm in healthcare, but they are poised to be a major contender in managing how care is delivered. There is little room for the OON strategy in these payer-driven networks. ASC leaders face a choice: bank on increased patient volume and accept the lower contracted reimbursement rates or remain OON and seek alternative patient volume.

"Right now exchanges are paying an average of 65 percent of Medicaid," says Ms. Webb. "ASCs will never be able to cover their costs at this rate." While state-run and federal exchanges may not hold much promise for ASCs, private exchanges could be a different story. The role these exchanges could play in ASC patient volume remains to be seen.

In or out?
The question is no longer of one or the other, but of how to find the right mix. "No center should be 100 percent OON or 100 percent in-network," says Ms. Webb. The delicate balance between the two has no one answer; it will always vary from market to market. In-network volume is necessary to maintain relationships with certain physicians and Medicare will be a percentage of total volume, but taking on 10 to 20 percent OON volume can tip the center from struggling-to-break-even to profitable. "It could save your center."  

More Articles on Coding and Billing:
ICD-10 End-to-End Testing: 3 Steps to Take
2014 CPT Code & Medicare List Updates: What Do ASC Leaders Need to Know?
Judge Sides With Chicago Surgery Center's Counterclaim in Out-of-Network Case

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