Is Out-of-Network Billing Still a Viable Business Strategy?

At a session at the 10th Annual Orthopedic, Spine and Pain Management-Driven ASC Conference, Ed Hetrick, president and CEO, Facility Development & Management; Jeff Leland, CEO, Blue Chip Surgical Partners; Danny Bundren, CDA, JD, vice president of development and operations, Symbion Healthcare; and Kevin McDonald, executive vice president, ASC Billing Service, Source Medical, discussed the best ideas for handling out-of-network patients in a panel moderated by Melissa Szabad, JD, partner, McGuireWoods.

Challenges in attracting patients

The group began by discussing the challenges in attracting patients to out-of-network facilities, which by being out of the health plan's network, have higher out-of-pocket costs to the patient. While the panelists agreed this can be challenge, the key is training surgeons and their office staff on educating patients on the surgery center option.

According to Mr. Bundren, the first challenge is educating patients they can go out-of-network, and it is a part of their benefits package. "The first hurdle to get over is they aren't doing anything illegal," he said.

Mr. Hetrick said that all surgeons at his centers participate in a yearly inservice to train them on the recommended "script" for explaining an ASC's benefits over a hospital. They are also educated on what they can and can't say to patients.

Providing patients with an estimate of their costs before scheduling the procedure was also recommended by several on the panel of a best practice as it eases the patient's concerns about the cost of the out-of-network procedure.

Another hurdle for out-of-network reimbursement is that, in some cases, patients are sent the check for the center's services that they must then turn over to the center. Mr. Hetrick explained that his surgeons are careful to educate their patients on this important step, and his centers are aggressive in going after the money if the patient fails to repay a center.


The group then turned to the various types of discounts that are sometimes given to out-of-network patients to reduce their direct costs of using the center.

The approach of each of the organizations represented on the panel differed. Mr. Hetrick said that his centers do not offer discounts at all and instead rely on education and the center's benefits over hospitals, such as lower infection rates and better facilities.

Mr. Leland explained that Blue Chip centers discount the patient's costs to in-network rates, but they are careful to inform each commercial payor of the discount and attach a letter explaining this practice to every claim.

Mr. McDonald said this is the method he would recommend if centers are going to offer discounts.

The group also discussed the practice of waiving an out-of-network patient's out-of-pocket costs altogether, which used to be more common. Today, though, several states outlaw this altogether, and in the states where it is not explicitly prohibited, it is generally considered somewhat risky in terms of legal compliance. "You must make an effort to collect," said Mr. McDonald.

"So many of the [regulations] vary state-by-state, so you really have to know the state you're operating in," said Mr. Hetrick.  

The future of OON

While many in the industry warn that an all out-of-network surgery center could be problematic for future sustainability, it remains a viable approach for some centers, especially if they are new or insurers are unwilling to pay rates that will turn a profit.

One concern the panelists mentioned is insurers attempts to attack out-of-network payments through threatening to retract physicians' in-network status. Additionally, they noted that some insurers are beginning to cap out-of-network benefits at several thousand dollars or, in some cases, several hundred dollars per year.

If this situation arises, Mr. Leland recommends approaching employers and explaining the drawbacks of this limit. He provided an example: An employee's child has cancer and the parent wants to take her to M.D. Anderson to receive care. These situations are exactly why employers and employees want out-of-network benefits, and it becomes clear to employers very quickly that a $500 annual limit in out-of-network benefit is essentially useless. Mr. Leland says once employers understand this, it becomes a "whole new kettle of fish" and in most instances, the employer is able to get the insurer to increase the limits.

Out-of-network billing is also often necessary for denovo facilities. "[Out-of-network] can be a successful start-up strategy," said Mr. McDonald.

However, most agreed that the out-of-network strategy is not the strongest long-term strategy as they expect integrated, accountable care will become more prevalent and the cost of care will be even further scrutinized.

More Articles on Out-of-Network Billing:

5 Steps Involved in Moving In Network
Lawsuits Over Out-of-Network Charges in New Jersey an Alarming Trend for Providers
Dispelling the Myths of Out-of-Network Billing

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