Payors that have followed Medicare’s payment system in the past, but don’t want to switch to the new system, may give you myriad reasons/excuses – they need more time to analyze the methodology, their systems don’t have the capability to handle the change, etc. But, if it’s advantageous for you, at least push payors to acknowledge the new payment rates are a fair baseline from which to negotiate.
“If they pay you based upon 2007 rates … then you’re accepting less from that payor than you are Medicare, so essentially a governmental program is subsidizing a private payor,” says Elizabeth Smallwood, CMPE, vice president, contracting and reimbursement, for Blue Chip Surgical Center Partners, and a former director of contracting for Humana of Ohio, with experience working for Aetna, and Anthem Blue Cross and Blue Shield. “I say, ‘you have to convert to the 2008 rates and give me something plus Medicare. We can debate about what that plus Medicare is, but you need to at least made Medicare’s 2008 rates as the baseline.’”
If you can get a payor to agree to this argument, but it is just unwilling to switchover and wants to keep you in the old nine grouper system, you can still find financial benefits by staying in the groupers, says Ms. Smallwood. Consider the following approach that Ms. Smallwood takes with carriers.
1. Identify those procedures in each of the nine groupers that your ASC intends to perform during the next year of the contract.2. Determine the estimated volume for each of these cases based on 2007 volume and any anticipated growth.
3. Determine the 2008 Medicare rate for each of these procedures.
4. Multiply the 2008 Medicare rate for each procedure by the number of cases you anticipate performing during the year (the estimated revenue you will earn over the next year from each case).
Using the figures you derived in step four, you will now determine a new rate to apply to the procedures that fall in each of the groupers:
5. Add together the figures you derived in step four for all of the procedures that fall under each of the groupers.
6. Add together the estimated volume of cases you anticipate performing that fall under each of the groupers.
7. Divide the “step five” figure by the “step six” figure and you have a new average rate to apply to each of the groupers.
For example, let’s say you identify two procedures in grouper one that you intend to perform over the next year of your contract. You plan to perform 15 of procedure X and 10 of procedure Y.
Procedure X reimburses at a 2008 Medicare rate of $500, while procedure Y is $1,000. You will perform 15 cases of procedure X at $500 each, meaning you will perform $7,500 worth of procedure X. You will perform 10 cases of procedure Y at $1,000, meaning you will perform $10,000 worth of procedure Y.
So, between procedure X and Y in grouper one, you anticipate performing $17,500 worth of procedures spread out over 15 cases. Therefore, your average reimbursement is $700 ($17,500/25), which is what would become the new grouper one rate.
Note: Don’t forget that you want to try to negotiate a rate above Medicare, but at least now you have a better rate from which to negotiate.
But what about the few hundred new Medicare-approved procedures that ASCs can now perform that weren’t included in the original nine groupers? This is where the “default rate” grouper — which most third-party payors include — comes in to play, says Ms. Smallwood.
To determine the default rate grouper rate, identify all of the new procedures you intend to perform. Then determine the volume you estimate performing for each of these procedures.
“I would utilize the physicians private practice data for the prior year of the volume of cases he did for place of service ‘outpatient hospital’ (i.e. place of service code 22) and the corresponding volume projected for that payor I'm modeling for,” says Ms. Smallwood.
Repeat the process described earlier for the nine groupers and you have your default rate.
With so many potential new cases, likely with a wide range of reimbursement, to add to this default rate, you might wonder if you could potentially set a default reimbursement rate that’s too low.
“If you base your projections on prior year actual from your physicians’ private practices, you should be okay,” says Ms. Smallwood. “It's very important that you have buy-in and commitment from the physicians to bring that mix of patients the projections are based on.”
While approximately 600 of the more than 800 new codes (not including ancillary pass-through codes) added to the ASC-approved list have 2008 Medicare reimbursement rates less than $400, a majority of the approximate 200 codes greater than $400 are significant cases with high reimbursement, she says. If you intend to perform many of these cases, you may find that your default rate is very high and draws questioning from the payor.
“It is important that you determine correctly the projected volume of those codes because if you are doing those codes, you'll need to point out to the carrier that (this) is why the default rate may have to have a very large increase,” says Ms. Smallwood.
Note: Keep in mind that the many of the large payors, such as Aetna and Anthem, have their own proprietary groupers, and in 2008 they slotted the new procedures into their grouper system, Ms. Smallwood says. For those payors that have remained true to the groupers (such as small regional plans), they have likely placed these procedures into the default category.
By following this process to determine the new rates for the nine groupers, you will hopefully see your reimbursement rates increase and can feel comfortable remaining in the system that some of your payors prefer.
Note: Look for more than 30 other tips to help you with CMS and third-party payor reimbursemnt challenges in the Sept./Oct. issue of Becker's ASC Review.