While in many ways ASCs are an ideal site of service, the ASC setting faces many challenges. Certificate of need guidelines can make it more difficult to include multiple specialties under one roof, reimbursement varies (and can be insufficient), manufacturers spend more time servicing and offering discounted pricing to their hospital clients, operating costs can be staggering and managing an efficient staff has its own host of obstacles. These challenges exist in all ASCs throughout the country, and none are more apparent than the cost of the implantable device and reimbursement challenges.
For specialties such as orthopedics, podiatry, spine, pain management, urology, gynecology, plastics, etc., there are more variable costs associated with these procedures. The most outstanding variable is the cost of the implantable used in the procedure. This is especially true in orthopedics, where an implant may be used in as much as 70 percent of all procedures done at an ASC. In these procedures the cost of the implant may be as high as 60 percent of the total cost of the procedure. When the total associated costs of the procedure outweigh the reimbursement, these procedures are sent to a nearby hospital. Health plans have devised several reimbursement strategies to compensate the facility and physicians services, but these strategies have struggled to find the right balance in terms of compensating for the growth of implant use and cost.
A facility may be reimbursed by one health plan in a facility fee that has been pre-negotiated by procedure and includes all costs associated with the procedure including the implant. The advantage here is with the health plan, because costs of implants and other items used in the procedure go up over time, but the rate at which they are being paid is fixed. Another health plan may reimburse the facility in a fee that allows for the total cost (including the implant) of the procedure to be tallied and then pays a percentage over that cost. The advantage here lies with the facility, but doesn’t hold the manufacturers accountable for pricing and can easily be abused by the facility in the art of “creative billing.”
A DBM company can facilitate the ASC’s reimbursement of implants only when they have the ability to bill the health plan and the ASC has the ability (either out-of-network or in-network) to bill the health plan separately for implant charges. In an ideal scenario, a DBM company could handle all implant cases for an individual ASC.
The value to the healthcare system to create efficiencies in cost while maximizing the quality of healthcare is one of the foremost topics of discussion on a national front. In a relationship between health plan and facility that is steeped in a history of mutual mistrust and lopsided negotiations – a DBM company has the significant opportunity to facilitate this relationship by negotiating pricing with device manufacturers, purchasing implants on behalf of the facility and billing the health plan. This arrangement aids in the growth of ASCs while minimizing cost to the health plan. In contracting with health plans to manage the implants for their ASC providers, a DBM company provides for a more efficient healthcare system. Commercial health plans can contract reimbursement for professional and facility fees based off of widely accepted figures somewhere above Medicare and the varying cost of technology can be accurately assessed and managed by a DBM company. The ASC can recruit specialties and physicians based on clinical factors and worry less about the financial risk of reimbursement. Health plans receive greater visibility on implant costs, collect more accurate data and save money by encouraging procedures to the ASCs where they are far more cost efficient than the hospital.
About the author
Dr. Phipps is Vice President and General Manager for IPG. He oversees health plan device benefit management program rollouts within Florida and North Carolina, and is the primary liaison with Blue Cross and Blue Shield of Florida. He is integral in developing key relationship with ASC chains executives, FL ASC Association leadership and key manufacturers. Dr. Phipps also manages the eastern field teams who are responsible for working directly with ASCs, Physicians, HOPD Outpatient/ASCs and Manufacturers.
Prior to joining IPG, Dr. Phipps served as Executive Vice President and Sr. Managing Director of BioPharma Partners and its subsidiaries, a consultative analytics and business development management firm servicing managed care health plans, biopharmaceutical manufacturers, genomic groups, device groups and pharma manufacturers. Dr. Phipps also held leadership roles with Pinsonault Associates, Serono, Inc., and Novartis Ophthalmics. Various HMOs, such as Inter Valley Health Plan and Prudential Healthcare, have also employed Dr. Phipps as Pharmacy Director and Pharmacy Compliance Director. Dr. Phipps has authored numerous papers published in a variety of peer-reviewed journals on subjects including Multiple Sclerosis, RA/Crohns, Fertility and BioAssay diagnostics, among others.
Dr. Phipps holds a Doctorate of Pharmacy (Pharm. D) from the University of Arizona in Tucson.
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