3 Problems and Solutions for Out-of-Network Reimbursement From David Lau of Medical Forefronts

Relying on out-of-network cases is seen as a risky move in the surgery center industry, but many centers still manage to garner a profit. However, getting out-of-network reimbursement from payors is becoming increasingly difficult, says David Lau, managing partner, Medical Forefronts, a surgery center management company managing center in San Francisco, Las Vegas and New York City.

"Without question, payors and insurance companies are getting much trickier when dealing with out-of-network facilities," he says. "They're not only reimbursing less on billed charges, but they're also just making it harder to get reimbursed at all."

This reflects from the trend of declining reimbursement across the board, Mr. Lau says. He shares three problems and three solutions for maintaining out-of-network reimbursement.


1. Payors are requiring more information for reimbursement. Some of Medical Forefronts' centers have a high proportion of out-of-network cases, and the standard accounts receivable cycle used to be as short as 90 days. Mr. Lau says A/R cycles are lengthening as the centers are increasingly getting letters requesting additional information such as full medical records, even after the procedure has been authorized. In one case, he says, a center received authorization for a surgery but afterwards, the insurance company said a separate authorization was needed for actual payment of the claim.

2. Payors are putting pressure on surgeons to keep cases in-network. Throughout its 12 years, Medical Forefronts has seen insurance companies send threatening letters to physicians demanding they keep their cases in-network or they will be dropped from their professional contracts with the company. Mr. Lau says for the first time, they have seen the penalty enforced. This pressure encourages surgeons to keep cases in-network, which can reduce the number of cases brought to an ASC.

3. Payors are contacting patients directly about billing.
In addition to putting pressure on surgeons, insurance companies are also putting pressure on patients. Mr. Lau says in some cases, the insurance companies have called their patients just days before a scheduled procedure to make sure they know the surgery center is out-of-network and imply that insurance may not pay any claims, thus making the surgery bill entirely the patient's responsibility.. He says patients have gotten get cold feet and cancelled procedures after getting these calls. Mr. Lau says that from what he can tell, the calls amount to scare tactics as his centers always verify insurance benefits prior to accepting or scheduling a case.


1. Take control over billing. A few years ago, Medical Forefronts' centers took their billing in house.

"As a result of that, as we started to understand the receivables stream, we learned how to be more proactive before a surgery rather than just billing after the fact," he says.

This includes being more thorough and vigilant during the prescreening process, which leads to greater success after the fact, Mr. Lau says. Medical Forefronts' centers have seen a 30 percent increase in reimbursement specifically for out-of-network cases after taking control of the billing.

"It's better because it gives us the opportunity to keep the same set of eyes — or at least a consistent practice — on the entire billing process," he says. "There are otherwise a lot of opportunities for the ball to be dropped as insurance and billing information is communicated from the surgeon's office, to the ASC and finally to the billing office."

2. Create a concierge service for patients. Understanding the terms and conditions of insurance is complicated, Mr. Lau says. He jokes that even after working in the industry for a decade, he barely understands it. To help guide patients through the entire financial end of their surgery center experience — including dealing with any pressure from insurance companies — Medical Forefronts has rolled out a concierge service. This program involves a staff member employed full time within the billing office that helps patients understand what their rights and benefits are.

"It's a personal point of contact to help people really understand what it means to go out-of-network and really understand the explanation of benefits and how that works," Mr. Lau says. "[The program] helps patients through any necessary patient balance collection with a personal touch."

3. Make sure billing departments stay on top of industry changes. Reimbursement is a constantly moving target, and staying on top of change is essential, Mr. Lau says.

"You've just got to make sure that whoever is responsible for billing really stays on top of changes in the industry," he says.

One big change is the transition from ICD-9 to ICD-10. Mr. Lau recalls being in meetings with physicians and asking what their offices were doing for the transition. He was met with blank stares. Other issues include staying current with the formatting of claims and medical records and changes to CPT codes, which, if done or understood incorrectly can cause reimbursement to be delayed or denied entirely.

"From our experience, it boils down to competence, compliance and anticipating change," he says.

Related Articles on Coding, Billing and Collections:
Henry County Health Center CIO: Don't Start ICD-10 Transition Without Warning Staff
CBO Report on Medicare Fee-for-Service Demos Predicts Challenge in Overcoming Fee-for-Service Incentives
Single-Payor System Finds Support in Oregon

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