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5 core concepts on ASC relationships with payers

AndreaWoodellPayer relationships with ambulatory surgery centers are making gradual changes as the healthcare system moves full steam ahead toward providing value-based care and reimbursement.

Rate increases still low

Payers continue to minimize rate increases, prolong the negotiating cycle and attempt to lock providers into multiyear contracts with no COLA, says Regent Surgical Health Director of Managed Care Andrea Woodell. However reasonable payments are achievable enabling centers to perform higher acuity cases in ambulatory surgery centers. Payers will offer too-low rates for procedures like total joint replacements or spine surgeries, so the facility must be prepared to sell their value proposition to each payer. Historically the payers have approved a short list of spine and joint cases for ASCs, and still label routine cases as investigational forcing the case to the hospital ORs where they do pay for it.

However, as the healthcare system begins to incentivize lower cost care settings and studies show these higher acuity cases are safe in the outpatient setting, some payers are working with ASCs to move those cases; but it's still not easy for the center to make a profit. The payers budget only token increases for ASCs. While the outpatient center saves them thousands over hospital outpatient fees, most payers' systems are unable to credit the savings, offering insufficient dollars to the ASC to move the case to a lower acuity setting.

Spine cases in ASCs
Today, many surgery centers and payers are focused on bringing higher acuity cases to the outpatient setting, but they move slowly. Medicare is adding spine cases to the approved coverage list, but the codes introduced won't pay enough for fusion cases. There are typically four or five CPT codes for spine cases, and Medicare didn't add codes two through five.

"The rates are inadequate and surgeons will hesitate to perform spinal fusions in the ASC for Medicare patients paying $7,842," says Ms. Woodell. "It is unlikely we will see many of these Medicare cases move, but the less acute cases such as the laminotomy or laminectomy will go to the outpatient setting."

But the Medicare coverage is a victory. Most payers base coverage as a percentage of Medicare, and Medicare's nod to spine surgeries — including spinal fusions — in the outpatient center signifies procedure safety and efficacy to other payers. Likely, the non-government insurers will develop appropriate rates for outpatient spine surgery including fusions.

"Since Medicare allows these procedures, even the most conservative payers will likely decide they are safe to perform in an ASC," says Ms. Woodell. "There is a liability issue that goes away. Contracts paying out Medicare groupers at a high percent are another opportunity to leapfrog reimbursement without touching the contracts."

More progressive payers, like UHC, have been driving the appropriate patients to outpatient surgery centers for a few years, and Ms. Woodell now sees more conservative payers including the Blues plans, Aetna, Cigna and Humana in some areas covering spine procedures in the ASC.

"There is an increased confidence level with the payers that the ASCs are making smart, appropriate decisions with patient criteria and selection," she says. "There is increased security with neurologists to move spine into the ASC and among orthopods to do total joints outpatient, and that's all supported by better clinical processes and payment control."

But just being able to perform the surgeries in an ASC isn't enough for many centers; owners and operators are also developing 23-hour stay capabilities and postoperative services. State laws that prevent 23-hour stays in some places are loosening to allow longer stays and remove certificate-of-need roadblocks.

"For states to make these changes in their coverage is a strong statement about how ASCs perform clinically," says Ms. Woodell.

Collaboration with payers
Even though payers are coming around to paying for the higher acuity cases in ASCs, they still aren't warming up to new partnerships or opportunities that benefit outpatient centers.

"There is little to no opportunity for ASCs to work with national payers on a large scale," says Ms. Woodell. "There have been some great efforts to lower payments with accountable care organizations, and that is typically pursued in the format of capitation. That is controlled by the independent physician associations and hospitals. Unfortunately, the ASC remains on one of the lower rungs for payment and those sub capitated agreements remain among the lowest paying contracts."

Additional incentives, such as bonuses on successful cost containment efforts, are not typically extended to ASCs. Within ACOs, the bonus payments typically stay with the physician and hospital.

Self-funded employers
But it's not all doom and gloom for ASCs; there are still new opportunities emerging with large employers and other organizations to partner as the high quality, low cost provider.

"Employers have struggled to take a more active role in driving patient care for a few years, and now that's coming to fruition," says Ms. Woodell. "Employers and brokers are adding a hidden level of benefits for patients to use their 'preferred' providers. The patients still have their regular plan with in-network deductibles, but there are certain surgeries triggering a higher level of benefit where procedure costs are extremely variable..There are a few companies that have created a narrow panel of providers and established bundled rates to work with employers on developing deals for their patients."

The bundled plans for employers are attractive because:

• Employers have one bill to pay
• They know what the cost will be upfront
• The cost is less than sending the patient to the hospital

"The employer incentivizes the member to their preferred provider by waiving out-of-pocket fees," says Ms. Woodell. "The patient might drive a few hours and stay overnight in a hotel before and after the procedure. One of our centers has received over 25 cases this year from employer referral. We are going to see a lot more of this in the future."

Future trends
There are several trends in healthcare that will benefit ASCs in the long run. These trends to watch include:

• Increasing price transparency
• Continued shifting costs to patients
• Healthcare education for patients about lifestyle choices
• Educating patients about their benefit level options

"Not only are patients going to know more about the difference between in-network and out-of-network centers, but they are going to know more about the ASC versus the hospital outpatient centers," says Ms. Woodell. "They might see a plan where their deductible is 20 percent in the HODP and 10 percent in the ASC. It takes a long time for some for some payers to switch the benefit plans, but with others it's easier."

More articles on surgery centers:
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