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The outpatient payment landscape — What high deductible plans mean for ASCs: 3 Qs with Dr. Henry Miller

Henry Miller, PhD, managing director of consulting firm Berkeley Research Group, has over 45 years of experience in the healthcare industry, including provider payment system design, regulatory analysis and strategic planning.

In 1973, Dr. Miller was involved with the first Medicare demonstration examining whether it should pay facility fees to ASCs. He was also a consultant for Medicare when it was developing its Prospective Payment System.

Here, Dr. Miller weighs in on the top challenges and changes facing the ASC payer landscape.

Note: Responses have been edited for style and clarity.

Question: How can ASCs leverage payer changes such as bundled payments, site neutral payments, price transparency and value-based care?

Dr. Henry Miller: The issues I see constantly now around payment are related to the in-network, out-of-network situation. For several years, ASCs in some states were operating with the idea that if they didn't contract with any health plans, they could bill as out-out-network providers and receive their charges. Initially, that worked. I can tell you now that from the work I'm doing that more and more health plans are adopting new methods of payments for out-of-network ASCs. Those new methods of payment are going to take away that incentive to stay out of network. That is an important consideration in California and New Jersey.

Q: How do you see the payer landscape for ASCs changing in the next 10 years?

HM: It's going to be interesting. I do think there will be a continued reliance on Medicare payments for the private sector health plans. The compounding factor is that there are continuing situations where procedures that are being performed in hospitals that don't need to be performed in hospitals (which is why ASCs came about).

Advances in anesthesia and technology allowed more procedures to be done in the ASC, and that was a favorable thing for the health plans because ASCs receive a lower reimbursement. What's happening now is that there's a second wave of these types of procedures performed in hospitals, like knee replacements, that are now being done in some ASCs. As the pattern of the industry goes, as soon as some start doing it, more will start doing it. I think the mix of procedures is for ASCs is going to change, and it could very well be that there's an incentive for health plans to be more generous in payments to ASCs for a procedure that was traditionally done in a hospital.

Over the next 10 years, I think the level of payment is going to remain fairly constant, increasing somewhat for inflation. Because of the mix of services, there actually may be more money that is being generated by ASCs because they're going to be performing some procedures that have higher payments than the procedures that they're performing now. I don't think there's going to be a downward shift in reimbursements for ASCs.

I've read that some people think payments to ASCs will get tighter and there will be less money paid for services. I don't see that happening, at least not from my end. I work mostly with health plans, and I don't see them over the next 10 years making significant changes in the way which they pay ASCs.

Q: High deductible plans are becoming more common. How can ASCs best handle patients who are insured by these plans?

HM: High deductible plans present two different problems to ASCs. The first problem is that because of the price of most ASC procedure, depending on the size of the deductible, it's likely that the patient is going to pay a substantial portion if not the entire amount of the deductible themselves. As a result, I think that's going to have a diminishing effect on volume. High deductible plans are going to lead to fewer elective surgeries being performed when people have to pay for it out of their own pocket.

The second problem is a collections issue on the part of the ASC, depending on how the ASC goes about its billing and collections practices. Many ASCs will demand an upfront payment, and if they do then they'll get paid, but if they don't, the high deductible plans will probably lead to collection problems. All in all, what I think it means is that high deductible plans are not a good thing for ASCs.

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