In a post-reform era, out-of-network payments remain one of the last frontiers for ASCs to reap higher reimbursements and increase their profit margins. However, an alarmingly high number of ASC administrators are unaware of how or choose not to take advantage of OON reimbursements, according to John Bartos, CEO of Collect Rx, a revenue enhancement firm specializing in maximizing OON reimbursements.
"If you look at the healthcare landscape today, there aren't a lot of opportunities to improve your reimbursement rates," says Mr. Bartos. "Your in-network rates are what they are — there's very little opportunity to increase those, and there is literally no opportunity to increase your Medicare and Medicaid rates. OON remains the one of the last frontiers to get higher reimbursements and raise profit margins."
This content is sponsored by Collect Rx
OON reimbursements are significantly higher than in-network reimbursements. While taking advantage of the potential for increased payments through OON can be beneficial for an ASC's bottom line, there are challenges involved. For one thing, payers employ various tactics to attempt to reduce OON payments.
"There are a number of companies out there that specialize in helping payers reduce reimbursements on OON bills," says Mr. Bartos. "As many members of our team used to work for these companies, we are well-versed in the tactics they use and how to deal with them.”
Payers often attempt to negotiate single case rate agreements or use usual, customary and reasonable rate re-pricing. Insurance companies will attempt to negotiate a settlement with providers for a large discount on a bill after services are provided but before payments are made. UCR re-pricing happens when the insurance company lowers the UCR payment close to Medicare rates.
Challenges imposed by payers are not the only obstacles for ASCs to collect higher OON reimbursements. Many ASC administrators believe they don't need to negotiate pre-payment rate agreements or pursue post-payment appeals. The reimbursement increases are significant and warrant the extra work involved in obtaining higher rates, according to Mr. Bartos.
There are five common myths regarding OON payments that ASC administrators should be aware of, according to Mr. Bartos.
Myth 1: The days of OON are over. This belief is heard among some ASC administrators, but it is false.
"We believe it should be a part of most facilities' reimbursement strategies despite any hits around the edges," says Mr. Bartos.
For one thing, PPO enrollment has more than doubled while HMO's have declined, according to Mr. Bartos. He believes the number of insureds seeking OON care will rise as the reach of the Affordable Care Act increases and the growth in narrow networks accelerates. Narrow networks are excluding many high visibility providers who have been in-network traditionally, further increasing the merits of pursuing enhanced OON reimbursements, according to Bartos.
The rise of the high-deductible health plan means individuals are shouldering a greater proportion of the cost of their care. Along with this comes the demand for more choice. People want OON benefits in their health plans so they can have a greater say in the providers they see and where they go for surgery.
Myth 2: Being 100 percent in-network maximizes reimbursement. While rates differ by case and geography, for the vast majority of cases, OON reimbursement is higher than in-network cases, which is why insurances companies actively seek to cut it down, according to Mr. Bartos.
"That said, we don't recommend going 100 percent OON," he says. Instead, ASCs should take a hybrid approach — meaning some of the ASC's business should be in-network and some should be OON, depending on its particular situation.
When developing an OON strategy, it is important for ASCs to take numerous factors into account, including payer mix, employer mix, relative market share and possible volume issues. To determine the best path to pursue when considering going OON, Mr. Bartos recommends identifying the number of cases and reimbursement level for the most common procedures performed at the ASC for each payer and then assess the economic benefit of going OON versus staying in-network.
"Don't go all in and cancel all of your in-network contracts at once," says Mr. Bartos. "We recommend a 'dip your toe in the water approach,' in which you choose one or two payers that represent a small amount of your business and go OON with those. If you are doing a good job after six to nine months, then you'll know you're in a position to go OON with other payers," says Mr. Bartos. "It is critical to take a structured, analytical approach to this issue, so providers can assess which payers and procedures to focus on, whether you're handling it in-house or using an outside company," says Mr. Bartos.
Myth 3: I am covered by my third-party rental network agreement. Providers may think third-party rental network agreements work on their behalf, but usually they have very little idea of who is actually accessing those contracts. As a result, providers get caught in a web of different types of contracts, and may be subject to a contract they don't even know exists.
Third-party rental networks are not signed with an individual payer, but with a company which contracts with numerous payers. Providers are contracted with all payers involved in the third-party network, but this can be disadvantageous from the provider perspective. "Third-party rental networks are a cost containment strategy for payers," says Mr. Bartos.
A key point to consider with such agreements is there is no patient steerage, unlike traditional managed care agreements, in which a provider accepts a lower reimbursement rate in exchange for a higher volume of patients. Additionally, payers are not required to accept these contracts — they will pick and choose the contract that will get them the lowest rate. Also, they typically reimburse based on OON benefits, but allow the payers to reduce allowables via UCR cuts, multiple procedure reductions and code edits, all in addition to the actual discount provided in the agreements.
Myth 4: We are doing fine with our OON reimbursements. "When people think of their OON reimbursements, they have a tendency to compare them with their in-network, Medicare and Medicaid rates and think that they're doing alright," says Mr. Bartos. "However, these are the wrong comparisons. The right comparison is whether they have maximized their OON reimbursements."
When evaluating their current OON reimbursements rates, ASCs should assess their resource allocation. Does it have dedicated resources to handle OON claims? Does it have the specialized expertise necessary to be successful in dealing with OON bills? Does it have enough data to support negotiations? Are there defined appeals and audit processes in place? After addressing any deficiencies, ASCs will be positioned to achieve even higher OON reimbursements.
Myth 5: Outsourcing doesn't make a difference. Increasing OON reimbursements is a labor-intensive process for ASC staff requiring focus. Before diving in, ASC leaders need to know if they have the proper resources and expertise on hand. For example, from start to finish, appealing an OON bill includes:
- Initial intake: Have all necessary documentation, such as the explanation of benefits as well as a well-crafted assignment of benefits, on hand.
- Payer verification: Contact the payer for a verbal explanation of the reimbursement.
- Payer engagement: Present the relevant facts and data. Escalate the issue when necessary.
- Appeal follow-up: Ensure appeal reviewed and bill re-considered appropriately.
- Additional payment (if successful). Payers do not always pay on time or with the correct amount. Follow-up to ensure the ASC is paid.
- Auditing OON activity: Consistent monitoring of OON activity will allow ASC leaders to gauge how effective the strategy is.
"Even with all the resources and data they have at their disposal, most payers outsource the handling of OON reimbursements, so ASCs should at least consider it," according to Mr. Bartos. If an ASC does not have the resources, expertise, or ability to manage the challenges posed by OON reimbursements, outsourcing the job may be in its best interest.