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How Narrow Networks Impact ASCs: Is Joining the Best Option?

Written by Laura Dyrda | March 05, 2014

Narrowing networks among insurance providers have been a trend for years, accelerated by healthcare reform implementation. Ambulatory surgery centers are now deciding whether to squeeze into narrowing networks or take their chances outside of them.

Within narrow network plans, payers place limits on which providers they'll cover, which can exclude certain physicians, hospitals and ambulatory surgery centers. There are positives and negatives to each situation, and the best option is market driven. Joining the narrow network — which includes accountable care organizations and several plans on the health insurance exchange — could drive patient volume as payers direct members to in-network providers; however, in exchange for high volume payers negotiate lower rates with in-network providers.

In many parts of the country, hospitals are working with insurance companies to develop narrow networks, which could have an impact on local ASCs if the center is left out. Payer dominance, physician employment and healthcare market competition also dictate whether becoming part of the network is the best strategy going forward. The lifeblood of many surgery centers — independent physicians — may receive fewer referrals if they aren't affiliated with the narrow networks either.

Some ambulatory surgery centers are countering the narrow network trend by offering competitive and transparent rates to self-insured employers and cash-pay patients. A growing trend among ASCs has been publishing prices online, and some are now looking at bundled payment options.

Others are looking to join the networks, often by aligning, partnering or joint venturing with a hospital or health system. In California, Robert Zasa, MSHHA, FACMPE, founding and managing partner of ASD Management, reports healthy activity in the private exchanges and sees an opportunity for ASCs to participate in narrow networks as a plan for success in the future. He recommends interested ASCs gather a list of private exchanges in their area and checking in routinely on potential opportunities to join.

The private exchanges can be an attractive option for businesses with fewer than 50 employees; depending on how the exchanges pan out, ASCs can carve a niche as the low-cost, high quality provider. On the other hand, costs are rising and independent ASCs have lack leverage during rate negotiations with in-network providers.

Key considerations when deciding whether to pursue narrow networks include:

•    Payer's current value out-of-network
•    Patient volume from the payer
•    Charge per case
•    Net receipts per case
•    Overall averages of closed accounts versus open accounts
•    Payer mix after going in-network
•    Whether payer enrollments are trending toward insurance exchanges
•    Forecasted revenue
•    Local healthcare market trends

More Articles on Surgery Centers:
Cost Cutting at ASCs: Best Initiatives From ASC Leaders

ASC QI Projects: Best Ideas for Biggest Impact

ICD-10 End-to-End Testing: 3 Steps to Take

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