Health Insurance Exchanges Gaining Steam: Great or Terrible for ASCs?

Health insurance exchanges are up and running and the individual mandate requires insurance coverage. This means more people in the United States are becoming insured — albeit with high deductible plans — and providers could see a higher volume of patients in the future.

"The verdict is still out on how much of an impact exchanges will have on ASCs," says Senior Director, Managed Care at Surgical Care Affiliates Marie Edler, MPH. "With open enrollment set to close at the end of March, enrollment numbers are increasing but not in all markets. The exchanges should bring new volume to the healthcare space, but with the increased out-of-pocket responsibilities for patients surgical growth may not increase proportionally."

Reed MartinSurgical Management Professionals COO Reed Martin says SMP centers have worked with some patients insured by exchange plans, but not enough to impact the centers. "We are seeing very low exchange utilization right now and the majority of the plans come from payers we already have contracts with through our commercial HMO rates."

The current volume of patients at tier one — the lowest reimbursement plans — isn't significant enough to warrant additional contract negotiations. However, in the future volume could grow big enough that Mr. Martin would have to contract with these payers at lower rates.

"So far we have been able to provide for patients in the exchange at the existing HMO rates," he says. "Since we are already contracted with the payers, the patients in the exchange can access our facility at contracted rates. That doesn't happen across the board and we still need to contract directly with some exchanges, but it has made it easier for us."

Potential benefits and challenges
Assuming health insurance exchanges continue to gain steam and become a bigger factor in the payer market, providers are looking at the advantages and disadvantages to participating in exchange plans. Some of the advantages include:

•    Less bad debt — patients who previously didn't have insurance will now at least have that portion of their procedure covered
•    Greater patient volume

"It can be very valuable for ASCs to participate in the exchange networks," says Ms. Edler. "ASCs may be able to secure additional volume growth by participating in narrow networks as a low cost option for surgical care."

Disadvantages to the exchange plans include:

•    Accepting lower reimbursement rates on those patients
•    Higher deductibles — centers will have to go after patients for larger sums
•    Risk of non-payment during the "grace period"

"ASCs will need to be mindful of the markets and payers that participate," says Ms. Edler. "Accepting differentiated commercial rates is a decision each facility will have to make, sometimes without clear data on how many lives the plan really has to offer and what the competitive network will be."

Identifying which patients are actually part of the plan and dealing with increased patient responsibility will also be challenging for ASCs. "Many patients will be enrolled in a health insurance plan for the first time and may not fully comprehend that in addition to a premium payment they are also responsible for a significant portion of the bill related to their procedure," says Ms. Edler.

The "grace period" patients have under the exchange plans covers them for 90 days of delinquent payment after the individual has paid one month's premium within the benefit year. If care is provided during the last 60 days of coverage for the delinquent patient, the provider may not be reimbursed.

"We'll have to keep a close eye on our margins and contracting with exchanges," says Mr. Martin. "There could be a challenge if the patient pays for the first month and then stops paying later. Taking on these plans places more risk on us than standard insurances because those plans require advanced payment."

Preparation for new patient volume
To prepare for the potential uptick of newly-insured patients, ambulatory surgery centers are becoming even more vigilant with efficiencies. "We haven't seen a significant growth yet because of the exchanges, but there is a possibility we could in the future so we're planning for it," Mr. Martin says. He suggests ASC operators:

•    Review and tighten block utilization
•    Reduce room turnover times
•    Work closely with anesthesia providers for effective induction and efficient anesthesia services

"In general, we provide preferred blocks when utilization is more than 70 percent, but also look closely at blocks that are under 50 percent," says Mr. Martin. "If surgeons are at the ASC for extended periods of time but have low utilization, we suggest reducing the block so other providers can utilize it. Or that provider can have a longer block every other week."

Communication between the business office and physicians is also key to smooth the transition. "Administrators and business office teams should partner with physicians to determine which plans they are participating in," says Ms. Edler. "It is also important that business office teams and collectors are educated on how to address patient questions regarding the new plans."

Good or bad for ASCs?
The exchanges — and healthcare reform in general — will make a huge impact on the future ASC industry. "ASCs are clearly a winner in the overall goals of healthcare reform because we offer exceptional quality at an affordable price," says Ms. Edler. "With additional volume and the ability to partner with payers in creative payment methodologies, ASCs should be highly valuable in the marketplace."

One of the more positive trends in healthcare today is price transparency, which Mr. Martin sees as advantageous for ASCs. "We firmly believe that transparency in terms of cost or quality structures benefit our facilities and the ASC industry in general," he says.

More Articles on Surgery Centers:
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Selling ASC Real Estate: 5 Things to Know for Flawless Transaction

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