Is Out-of-Network Reimbursement Disappearing for ASCs? Q&A With John Bartos of Collect Rx
Collect Rx, a company that specializes in helping surgery centers increase reimbursements on out-of-network bills, discusses how out-of-network has changed in the last 10 years, and whether the strategy has a future given the changing healthcare market.
Question: Let's discuss changes in out-of-network reimbursement over the last 10 years. How has the strategy changed for surgery centers?
John Bartos: Most out-of-network claims come from PPO members with out-of-network benefits. Up to 20 percent of PPO members have an out-of-network experience each year. Over the past ten years, the number of people enrolled with PPOs has increased significantly as HMOs have declined. The number of members covered by a PPO plan was approximately half of the market 10 years ago, and is now over 70 percent. As such, the number of out-of-network bills has risen correspondingly over that time period.
In response to this increase in out-of-network bills, payors have taken various steps during the past 10 years to reduce payments on such bills. So, for example, during the past 10 years, we've seen a gradual increase in patient responsibility (higher deductibles and co-pays) on out-of-network bills. We've also seen the emergence of limited benefit insurance policies, which typically limit reimbursements to a percentage of Medicare. Examples of such policies include the United Healthcare MNRP and Cigna MRC policies. The good news, contrary to what some people seem to think, is that these policies have not been widely adopted in the marketplace.
In spite of these efforts by the payers, reimbursements for out-of-network bills today are higher — and frequently much higher — than a provider's reimbursements on their in-network bills. And with the proper expertise, strategy and execution plan, there's an opportunity for providers to increase those reimbursements on these bills even higher.
Q: In what situations is OON still viable? How can surgery centers determine if the going out-of-network will be more profitable than staying in-network?
JB: Candidly, many in the industry think that being out-of-network is an "all or nothing" strategy. This is what payors want surgery centers to think as part of their efforts to steer them away from an out-of-network strategy. Our view, and the view of the hundreds of ambulatory surgery centers we service, is that a hybrid out-of-network/in-network strategy puts surgery centers in the best position to maximize revenue.
With rare exceptions, in most geographies, it is financially prudent for an ambulatory surgery center to have a portion of their revenue come from out-of-network patients. This can range on the low end from 20 to 25 percent of revenue from out-of-network patients up to 75 to 80 percent depending on a number of factors. These factors include the 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. If ambulatory surgery centers are prudent in picking and choosing the payors with which they are out-of-network, and are prepared to engage payors on the unique parameters related to out-of-network reimbursements, they will maximize total revenue and profits.
Q: Are certain specialties more appropriate for an OON strategy than others?
JB: Our experience is that all types of specialties can benefit from an out-of-network strategy. With that said, 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. Examples include orthopedics, neurosurgery, spine, and other similar higher dollar specialties. But even lower-dollar specialties can benefit from the greater reimbursements from out-of-network bills.
Q: Do you think there's a future for out-of-network?
JB: Absolutely. For starters, with ObamaCare, there will be 30 million more insureds in the U.S., which means the number of insureds with out-of-network benefits will increase correspondingly. Even setting aside ObamaCare, we believe that PPO policies will continue to grow.
For more than 10 years now, the industry has been predicting the imminent demise of out-of-network business. Yet it doesn't go away. We think the fundamental reason is that consumers want choice — simply put, they want the ability to choose where they receive care. Consumers want access to the value that ambulatory surgery centers offer — the service orientation, the higher quality, the personalized care, and the state-of-the-art equipment. Consumers are even checking on the hospital versus the ambulatory surgery center on quality of care measures like infection rates in making decisions. We just don’t see these kinds of consumer demands going away.
Q: What steps should a historically out-of-network surgery center take in order to move in-network?
JB: A substantial mix of out-of-network business is essential to maximizing total reimbursements. With few exceptions, adopting a 100 percent in-network strategy doesn't make sense. Blue Cross Blue Shield plans in some markets would be an example of a payor with which an ambulatory surgery center may want to be in-network.
We hear ambulatory surgery centers express concern that they will lose patients if they go out-of-network with a given payor. This is typically not the case. Most referrals to surgery centers are made by physicians and are not driven there because of the payers or their patients. For the reasons stated above, patients want to be treated at ambulatory surgery centers, and generally follow the advice of their physician. As a result, going out-of-network should not significantly affect patient volume. Payors, of course, would like providers to believe to the contrary.
Learn more about Collect Rx.
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