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3 Myths of Out-of-Network Reimbursement

At the 11th Annual Spine, Orthopedic & Pain Management-Driven ASC Conference in Chicago on June 14, John Bartos, JD, CEO of Collect Rx, shared his  advice for providers to maximize reimbursement from out-of-network payer relationships.

As providers look around for cost-cutting opportunities, many find that most have already been exhausted, Mr. Bartos said.  He argued that out-of-network reimbursements are one of the richest areas for providers to obtain higher  payments from payers and ensure their billing services are carrying their weight in the matter, as well.  

Payers used to pay 25 to 60 percent of billed charges based on a midpoint of pricing, but today that level is shrinking to the lowest payment levels they can find in that market, generally benchmarking to Medicare, said Mr. Bartos, who formerly worked for a major health insurer. Payers are outsourcing their out-of-network business to any of over 100 vendors nationwide today, which are persistent in keeping those payment levels small.

He said despite these challenges, several myths permeate throughout the industry that falsely discourage providers from pushing for better reimbursements.

Myth 1: The days of out-of-network coverage are over. Many industry analysts have predicted out-of-network coverage would phase out, especially once the healthcare reform law goes into full effect next year, but the truth is that's been said for the past 15 years and the market looks largely the same today, Mr. Bartos said. Deductibles and copays are growing higher for consumers, "but the reality is that $60 billion in out-of-network claims are being processed each year," he said, and customers have favored PPO plans over HMO plans.

Myth 2: Being 100 percent in-network maximizes reimbursements. "Generally out-of-network reimbursements tend to be higher than in-network, because managed care contracts at heart of matter are really volume discount arrangements," Mr. Bartos said. Providers should look at what reimbursement levels are for in and out-of-network payers for their 10 most common procedures, he advises, then determine the volume of each and multiply to learn which payer arrangements are most profitable.

Myth 3: We've got it covered. Although many providers claim their business is healthy without needing to stir the pot with out-of-network payers, Mr. Bartos said many centers are not performing as well as they believe.  Often, he said they lean too heavily on their billing company believing the vendor will handle their out-of-network claims well, and he finds this is frequently not the case.

This is hard to prove without intensive internal analysis, he explained, because the appeals process for out-of-network claims tends to require a lot more documentation. Obtaining long-form versions of explanation of benefits agreements is an essential but commonly overlooked measure for provider organizations to take to hold payers accountable to their promised benefits.  And when corresponding with payers on out-of-network claims, be sure to record the reference number for later referral.

Out-of-network payer rates are not cut and dried, he said, and require informed discussion with documented evidence to support claims. "It's not a formula. It's an art, not a science."

More Articles on Payer Relationships:

Politics in Healthcare: What ASC, Orthopedic Leaders See Coming Down the Pike
5 Things to Know for ASC Success in the Next 5 Years
ACOs: 5 Ways They Matter for ASCs

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