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The Future of Out-of-Network Reimbursement for ASCs: 4 Thoughts From Industry Experts

Out-of-network reimbursement is one of the most significant issues in the surgery center industry today. Many experts believe that dependence on out-of-network reimbursement will become unfeasible in the next few years, but some surgery centers and markets continue to buck the trend by profiting tremendously from OON. Here four surgery center industry leaders discuss the future of out-of-network reimbursement.

We want to hear from you. If you have an opinion on the future of out-of-network, please email Rachel Fields at

Scott Becker, JD, McGuireWoods:

Here are five thoughts on out-of-network reimbursement:

1. It poses a constant, evolving risk to centers. Out-of-network patients are very hard to wholly ignore as a revenue source even with payors increasingly scrutinizing out of network payments.
2. Given some offered contract rates, some centers have little choice but to be out-of-network. For example, some payors offer centers contract rates very close to Medicare rates.
3. Centers face recoupment claims, new requirements such as written patient acknowledgments, threats against in-network doctors by payors, payor lawsuits, having every claim go to payor audit and non-payment of claims. Generally, we see minimal state-initiated actions.
4. There are several steps ASCs can take to reduce and assess out-of-network risk.
5. Some ASCs and chains, notwithstanding these issues, still seem to be making a lot of money from out-of-network patients and payors.

Jimmy St. Louis, CEO of Advanced Healthcare Partners:

The large majority of people going in-network are doing it to drive volume and to get some predictability around pricing and reimbursement cycles. A large majority of the businesses we work with and manage are on an out-of-network basis, and although in network status is effective for a lot of healthcare, out of network status is beneficial for emerging healthcare markets largely because more unique technologies and treatment protocols often are beneficial to patients but insurance companies are slower to adopt them. Typically, to support an out of network status for any of the companies that we manage or grow, we would create a direct-to-customer marketing strategy to drive volume to the facility.  If you're not in-network, you need someone to drive referrals and patient volume, as it typically is not coming from other physicians, because you are not operating within a network.

We've also created a revenue recognition process for our out of network clients because when you bill on an out-of-network basis, your cycle time to reimbursement is going to be unpredictable and can lead to challenges. As we drive sufficient volume to the practice, we can get statistics that allow us to predict reimbursement and pricing, allowing us to better predict our clients accounts receivables cycle and cycle time. We'll look at each case from a reimbursement perspective and essentially try to establish out of network pricing according to reimbursement trends. Typically, out-of-network pays at a higher level, so as we are effective in driving volumes, we see higher facility and physician level revenues overall. If you can deliver sufficient patient volume, and maintain a superior level of quality, staying out of network certainly displays an advantage. This doesn't mean that going into network doesn’t certainly have its advantages as well, such as credibility, and an expanded network of physician partners.

We also always place a heavy emphasis on research, outcomes, patient satisfaction and quality of care. That way, if insurance companies do start to push back and slow payments, we're armed with the right data to negotiate favorable contracts due to favorable outcomes, high levels of patient satisfaction, and our ability to market directly to patients.

Patients' financial responsibility can certainly be greater with out-of-network, and from that perspective, we typically recommend an in house financial services and billing team that we provide at AHP and they then work hard for their reimbursement. The patient doesn't have to pay cash and fight for their reimbursement themselves which is a great service for the patients. We're also not going to go out-of-network on services that are offered next door on an in-network basis, unless we offer a superior service or a higher quality of care. If there's a differentiator, we'll go out-of-network and work to track the highest, most credible level of data. That's the conversation we have with consumers: We say we are out-of-network, we present the quality measurement statistics and outcomes and we explain we are still providing the highest quality care. We believe that both scenarios have their benefits, but there is certainly a case to be made, in a lot of circumstances, to stay out of network.

John Seitz,

I'm sure you must be hearing this from other people, but insurance companies have figured out a way to deal with out-of-network by selling policies that limit out-of-network coverage. And we're seeing an awful lot of it — from Blue Cross to Aetna to Blue Shield and United — anywhere from $389 per occurrence to an annual cap of $1,000 or $1,800 because they don't want you going out-of-network.

Think about it this way: If I'm the insurance broker selling a new program to a company with 500 employees, I can go in and say, "Hey, your premium is going to go up 22 percent this year, but we can knock that down to 10 percent if you limit the out-of-network benefits. Your employees don't like going out-of-network; they'd prefer to know the facility is someone we do business with." The employer is going to say, "Sign me up!" The employer gets the policy, and when a doctor says, "Let's go to Spalding Surgical Center for your colonoscopy," if you're out-of-network and you do the verification, you find out you're going to get $389.

For the most part, we've chosen to go in-network. We're still seeing centers that always specialize in out-of-network cases. They do all out-of-network patients and just cherry pick the cases, and the doctors over there are saying they're getting $20,000 for a colonoscopy because they're treating patients with plans that say the surgery center will get 70 percent of charges.  You can still make a lot of money on out-of-network if you get people with the right plans.

Adriaan Epps, director of contracting services for abeo Management Corporation:

When it comes to out-of-network reimbursement specific to ambulatory surgery centers, we find that whether or not ASCs are successful in contracting with top commercial payors really makes the final determination in staying in-network or going out-of-network. The problem they run into is that if you are out-of-network, there's a tendency for payors and referring surgeons and primary care providers to potentially not refer patients to surgery centers if the surgery center is out-of-network. This is especially true if the ASC is out-of-network with a payor like Blue Cross Blue Shield, where the physician might have significant volume and significant membership. That can significantly hurt and impact the surgery center and doctors, and it's something they certainly have to consider and something we work with regularly.

What are the pros and cons of going out-of-network versus staying in-network? Do we offer discounts, and what kind of discounts do we offer to members if we are out-of-network? Maybe we offer a 10-20 percent discount for most people and a deeper discount to those with financial hardship, to offset someone who is willing to pay all the services upfront if they are out-of-network.

In my opinion, the ideal situation is to contract with all your payors and achieve the best possible rates so that you're able to run your business effectively and make up for the loss in your business that typically occurs with Medicare and Medicaid. As far as long-term strategy, I believe that being in-network is best for the healthcare delivery system and continues to build relationships in the community — not only with consumers, but with physicians, health plans and hospitals. And not doing so can have huge ramifications, not only to cost.
If you are out-of-network, one of the problems concerns how long it actually takes to capture and collect that money. Your A/R can significantly increase if you have a lot of self-pay patients and if you don't do your due diligence and collect co-pays and co-insurance. Trying to go after the patient afterwards for that money make take months and years, and sometimes you may not ever collect that money. And payors know that and will use that against you — they'll say, "It's going to take you much longer to collect that type of reimbursement." You can potentially make more money out-of-network, but unless you are very good and have a good system in place to follow through with the collections process, you could be dealing with a significant A/R issue.

Related Articles on Coding, Billing and Collections:
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10 Steps to More Profitable Managed Care Contracts
Ohio Hesitates on Health Insurance Exchange, Raising Concerns About 2013 Deadline

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