Implants: Purchasing, Contracting, and Reimbursement Considerations
This story was written by Amy Gagliardi, corporate purchasing director, Michael Orseno, revenue cycle director, and Andrea Woodell, director of managed care for Regent Surgical Health. The story originally appeared in the Regent e-newsletter, which can be subscribed to here.
At Regent Surgical Health, one of our corporate initiatives for 2012 is to prevent working in silos. As we continue to grow our business, it is critical that we work as a team to improve and streamline processes.
An important component of this process is managing the contracted rates, costs, and billing process of implants. The key to managing implant negotiations, costs, consignment programs and physician preference items is communicating with the business office billers and coders and understanding what payor contracts reimburse for implant intensive and high-cost disposable cases. Regent has worked to broaden communication by cross-training employees and offering web-based applications that allow our centers to have immediate access to implant costs.
Payor negotiations and the resulting contract terms are often counterintuitive to streamlining purchasing and billing processes. The payors have different reimbursement methodologies including but not limited to:
• Cost plus
• Cost of implant paid upon reaching a certain cost or charge threshold
• Implant costs rolled into a case rate
• Implants paid at cost not to exceed a threshold
Managed care wants to negotiate favorable terms while operating within the constraints of the payor reimbursement methodology. The end result is:
• Variable implant markups required for different agreements necessitating increased vigilance by the billing office
• Unaligned incentives for purchasing because agreements vary, having minimum or maximum thresholds, resulting in conflicting directions to the purchasing team
The obvious goal from an operations perspective is to align incentives. Unfortunately payor mandated contracting methodologies undermine this process. We encourage transparent discussions with the payor to understand their true objective.
A coordinated review by center, by contract, of implant costs, charges, and payments between purchasing, the business office, and the managed care negotiator is critical to successfully maximize implant compensation. It is also important to identify possible misunderstandings about implant reimbursement which could result in overpayment leading to painful adjustments and offsets by the payor.
Business office staff must be vigilant when billing out implants to ensure proper reimbursement. Many payors require a copy of the implant invoice before they'll even consider paying. These claims with attachments must be sent on paper, so time is of the essence. The business office staff needs to work hand-in-hand with the materials purchasing staff to ensure the claims are sent in accurately and in a timely fashion. A good idea is to have the materials manager access the surgery schedule daily to ensure essential implants are on-hand and invoices are ready for the business office staff when needed.
An ASC may elect to contract with an outside company who will pay, bill, and be reimbursed for implants, taking the facility completely out of the reimbursement equation. This may be attractive to an ASC who has a lean business office staff or has difficulty obtaining proper reimbursement from a particular payor. Options are limited to select payors and may not be available in all areas.
Based on the reimbursement methodologies above, business office staff must be aware of the cost of the implant to ensure proper reimbursement. Performing costly procedures such as neurostimulator permanent insertion may cost a facility upwards of $25,000 for the implant alone. While time is usually of the essence, taking an extra hour or several hours to ensure claims of this nature are billed properly and have the correct attachments may mean the difference between getting paid in 30 days vs. 90 days with re-bills and follow-up calls.
Breaking down the barriers between the materials purchasing, managed care, and business office staff has led to increased communication, improved inventory management and ultimately timelier, higher reimbursement at Regent facilities.
Related Articles on Regent Surgical Health:
ASC Industry Leader to Know: Andrea Woodell of Regent Surgical Health
Regent Surgical Health Hires Paul Eiseman as Vice President of Business Development
Developing an ASC Joint Venture Strategy That Works
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