Medicare
1. Stay informed of payment system updates.
The move to the new ASC/outpatient prospective payment system (OPPS) brought with it a new challenge — the possibility of monthly and quarterly updates to the system, says Judie English, vice president of business operations and a partner in Surgery Consultants of America and Serbin Surgery Center Billing. This is something that hospital outpatient departments (HOPDs) are used to, since they fall under the OPPS system, but such frequent adjustments are new for ASCs.
"I now know why HOPDs have bigger billing staffs — it’s because just trying to keep up with the things that CMS changes from minute to minute is really difficult," Ms. English says. "They change the price of the drugs and what’s covered (ancillary procedures) … and it’s a lot of sorting to go through."
But it is sorting that you must do to ensure your Medicare contract information is correct.
"Just between January and April, they had a chance of just a few cents on several of the drugs on the list," Ms. English says. "It wasn’t a lot, but it was enough that it was different."CMS sends free e-mail alerts announcing these updates, so if you are contracted with Medicare, it is likely you are already receiving them. Some of the updates that come to you may not apply to ASCs, as they address changes to the entire OPPS system. But you must make sure a member of your business office staff is reviewing all of these updates, and identifying which ones do apply to your organization and how you are affected by them.
CMS sends free e-mail alerts announcing these updates, so if you are contracted with Medicare, it is likely you are already receiving them. Some of the updates that come to you may not apply to ASCs, as they address changes to the entire OPPS system. But you must make sure a member of your business office staff is reviewing all of these updates, and identifying which ones do apply to your organization and how you are affected by them.
"I think this is going back to the very, very basics — realize when it’s changing, what’s changing, assign someone from within your organization to keep up on it and disseminate that information," says Caryl Serbin, RN, BSN, LHRM, president and founder of Surgery Consultants of America and Serbin Surgery Center Billing.
2. Closely monitor impact of new payment system.
While you may have projected how the new payment system would impact your ASC’s bottom-line in 2008 (and beyond), you should be closely monitoring the exact effect now that you are receiving the new reimbursement rates from Medicare.
"We’re watching it carefully each month to see our volume of Medicare, reimbursement from Medicare and what it’s doing to our bottom-line," says Dana McGrath, RN, MSN CASC, administrator for Algonquin Road Surgery Center.
Ms. McGrath says Algonquin Road has made some significant changes over the past year as a result of the movement to the new system, eliminating ophthalmology procedures, slightly increasing podiatry and significantly increasing orthopedics. When comparing her Medicare net revenue per case from June 2007 to June 2008, she has seen a 36 percent increase thanks to these changes.
By reviewing the data and sharing it with the ASC’s physicianinvestors, she hopes to see the net revenue increase even more."While I review the data monthly with our management company, Health Inventures, the physician-investors also get to see it monthly," Ms. McGrath says. "We review a list of their patients by payor and charges, collections, contribution margin and net income. So I’m showing them, month to month, what patients they are bringing in here by what payor. It’s pretty transparent."
This not only helps the physician-investors to become more conscious of the cases they bring to the center, but it has also encouraged them to look more closely at the ASC’s operations and determine if there are areas to tighten expenses, such as supply or clinical costs, she says.
3. Get paid … for what you should get paid for.
Under the new payment system, ASCs can get paid for many new ancillary procedures and drugs. But ASCs won’t get paid unless they know to include these reimbursable items on their Medicare claims.
"I’m still finding that a lot of people didn’t know what things are covered and not covered," says Caryl Serbin, RN, BSN, LHRM, president and founder of Surgery Consultants of America and Serbin Surgery Center Billing. "The big thing is that they don’t have a mechanism" for capturing the charges.
The first step to resolving this issue is for the administrator to go to the Medicare ASC-approved list and identify what procedures and ancillary procedures the ASC performs, and what drugs it uses that are covered by Medicare. When this information is gathered, disseminate it to the entire billing office staff.
"I would imagine that there are a lot of ASC coding people who may not even be aware of some of the ancillary procedures they can now charge for," says Ms. English.
If your ASC adds a new surgeon, verify whether this addition will require your list of covered procedures/drugs to include new items, says Ms. Serbin.
Once you have this list developed, now you must address the next challenge — ensuring your billers and coders know when a physician performs any ancillary procedures or provides any covered drugs.
You want to certainly encourage your physicians to perform their dictations and encourage the nurses to provide all the information and details about the cases as well. You may also want to consider developing a charge sheet, says Ms. Serbin.
"There needs to be a charge sheet to say that you used mitomycin, or this or that," she says. "No system has been put in place to capture the charges for things they didn’t get to charge before."
You will want your charge sheet to list just the covered ancillary procedures and drugs that apply to your center. Omit anything that does not apply to your center to keep the charge sheet simple and concise. After a procedure, the nurse can go through the charge sheet and check off the reimbursable items that apply to that particular case.
"You used to do this when you charged for supplies back when we originally could bill for supplies with Medicare many moons ago," says Ms. English. "We always had a list — taken from the preference cards — and put it in the chart, and you just checked off what was used. But now just have it with these ancillary procedures that are applicable to your specialty."
If there are only a few ancillary procedures/drugs that apply to your center, such a charge sheet may not be necessary. But it’s still wise to explore other methods to remind physicians and nurses about these reimbursable opportunities they should note on their reports.
"Maybe hang a little sign [listing these items] where the nurses do their charts or where the doctors dictate that says, ‘Remember, starting in 2008 you can get paid for this, this and this by Medicare,’ rather than creating a big checklist to go through," says Ms. Serbin. "If you’ve got it culled out to five or six things, then they’ll be able to go, ‘Oh, yeah, I used that.’ It helps with the education process."
Third-party payors
Getting fair, let alone good, contracts with third-party payors is still a major challenge for ASCs. Even if you think you’ve obtained a contract with desirable reimbursement rates, there are still many potential barriers you could face that could lower the value of the contract. To help you receive the money you deserve from commercial payors, our experts offer the following insight and tips.
4. Not all payors care about the new Medicare methodology.
Many commercial payors model their fee schedule off of Medicare’s, and likely had your ASC’s contract following a grouper system similar to Medicare’s ninegrouper system. But not all payors use a payment system based upon CMS methodology, so your efforts to get these payors to increase your reimbursement for procedures that are now paid higher under the new Medicare system may be met with blank stares.
"Payors that are not on a payment system that’s based upon the CMS methodology, they don’t really care" about the new payment system, says I. Naya Kehayes, MPH, managing principal and CEO of Eveia Health Consulting & Management. "It has absolutely no impact on them if they have a proprietary payment methodology/fee schedule that is not based upon the Medicare system, in my opinion."
While you can certainly try showing these payors Medicare’s new reimbursement rates and hope they are willing to consider them as a baseline, another good approach is to …
5. Show payors they save with you.
If your ASC is not performing some procedures that you can and would like to bring into your center because of low reimbursement rates offered by payors, it is likely that these procedures are going to the hospital. If this is the case, your payors are probably reimbursing the hospital at a higher rate than you would expect and be willing to accept to perform the same procedures. If you can demonstrate the savings opportunity that exists for the payors if these procedures are performed at your ASC, you may find better success with your negotiations.
"You can say, ‘There’s a lot of opportunity if you negotiate with us a reasonable rate that lets us move these cases from the hospital,’ but you have to be able to get your hands around the volumes that your doctors are doing at the hospital," says Ms. Kehayes.
If this data is not something you can obtain from your physicians, the payors should have the ability to gather this information.
"The payors have access to that information in their claims databases, but it’s a matter of getting them to look at the data," Ms. Kehayes says. "What they typically need to look is really the group’s names or their tax ID numbers. If [the physicians are] your partners, you should be able to disclose that to them, but it might be a good idea to review the approach with your partners and inform your surgeons that the payor needs this information in an effort to enhance the ASC’s contract."
Once you can demonstrate the potential volume the payor could move to your ASC and the money it could save as a result, you will want to have a strong argument for the particular reimbursement rate you are seeking for your contract. Fortunately, there are some logical arguments (tips six and seven) you can make to support your claim for good rates that will still save the payors money.
6. Take advantage of transparency.
With a little research, you can determine the baseline for what hospitals in your area are receiving for the procedures you want to perform.
"Go through the payor Web sites or CMS," 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.
By visiting the payor Web sites, you can enter location information (zip code) and estimate how much the hospital receives for these procedures. Some of the sites list an "average cost" without adding ancillary and professional costs, she says. Some sites break down the cost for facility, professional, anesthesia and ancillary costs. You will at least be able to get a ballpark figure with which you can approach a payor.
"From a negotiating perspective, I can now go back to the payor and say, ‘I know what you’re paying the hospital; I’m willing to take a 20 or 30 percent discount,’" says Ms. Smallwood. You will want to make sure that whatever discount you offer will still keep the procedure you want to perform in your ASC profitable, but demonstrating any savings opportunities should help your case with the payor.
7. Accept less than HOPD Medicare rates.
Medicare reimbursement to HOPDs is often the baseline to look at for presenting the argument that the ASC presents a cost savings opportunity, and it is public information available on the CMS Web site.
If your case mix proves to be advantageous under the APC payment methodology, and your contracts are based upon a Medicare grouper methodology, they are typically going to value at rates below hospital Medicare rates. In these situations, "Go and try to negotiate 90, 95 or even 100 percent of the hospital (Medicare) rates," says Ms. Kehayes. "You can demonstrate to the payor how much money you can save them by making the assumption (that they use Medicare as a baseline). I say to the payors all of the time that ‘there’s no way you can tell me you’re paying a hospital in this urban location Medicare rates. This is what I can offer you to help save you money.’ You’re now showing the payor how you can save them money."
This approach can be most effective when the payor is eager to have cases move out of the hospital. However, it is critical that the ASC understand where their current contract value is in terms of APC compensation, which is highly impacted by case mix.
With the new payment system reimbursing ASCapproved procedures an average of 65 percent of HOPD’s Medicare rates, a contract that brings these rates up to 90 percent or more should be a nice boost if your case mix is favorable under the new system, such as orthopedics, general surgery and ENT.
Success with this tactic is not uncommon. In one particular situation, an ASC Ms. Kehayes works with was not performing cases because the reimbursement rates were not high enough.
"I kept saying to the insurance companies, ‘why wouldn’t you want to do this deal? If you do this deal, you’re going to move volumes from the hospital,’" says Ms. Kehayes. "How many commercial payors do you think are paying a hospital the hospital Medicare rates? A good guess would be none. They’re paying some percentage above that. If a surgery center can do surgery at below hospital Medicare rates, that’s your argument because now you’re on the same payment system, on the same playing field."
8. Push for fully implemented Medicare rates.
While many payors that have followed the Medicare methodology in the past are fighting a switch to the APC system, if you have a payor that is willing to consider the new Medicare payment rates as a baseline from which to negotiate your contract, push for the fully implemented rates in circumstances when the fully implemented rates are more profitable for your center than the transitional rates.
"I show them the fully implemented rates published in November 2007," says Ms. Kehayes. "You can argue that the fully implemented rates are a better representation of cost since the new payment systems is based upon the hospital outpatient prospective payment system and there is cost data collected from hospitals and reported to CMS that impact APC payment weights and rates for HOPDs. Therefore, it can be argued that the fully implemented rates are a better representation of cost which is being acknowledged by CMS, and oftentimes increases the success of negotiations with payor by providing more data to support your claim for increased compensation."
9. Make the nine groupers still work for you.
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 Ms. Smallwood. "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 switch over 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:
• Identify those procedures in each of the nine groupers that your ASC intends to perform during the next year of the contract.
• Determine the estimated volume for each of these cases based on 2007 volume and any anticipated growth.
• Determine the 2008 Medicare rate for each of these procedures.
• 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:
• Add together the figures you derived in step four for all of the procedures that fall under each of the groupers.
• Add together the estimated volume of cases you anticipate performing that fall under each of the groupers.
• 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 would be $700 ($17,500/25), which is what would become the new grouper one rate.
Don’t forget that you want 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.
Keep in mind that the many of the large payors, such as Aetna and Anthem, have proprietary groupers, and in 2008 they slotted the new procedures into their grouper system, Ms. Smallwood says. For 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.
10. Make sure "grouper" means what you think it means.
It’s understandable to see the term "grouper" and immediately think of it as a Medicare methodology reference. Unfortunately, looks can be deceiving.
"ASCs can sign a contract that says it is based upon a grouper methodology, but it doesn’t necessarily say that it’s Medicare groupers and they just assume it’s Medicare groupers just because it says grouper," says Ms. Kehayes.
Going by this assumption of Medicare groupers, an ASC may not request the "mapping" from the payor, which describes which payment group a CPT code will fall under, because the ASC thinks it already knows the rates since it knows the Medicare grouper system. Only after performing a few cases does the ASC learn that its contract follows a different grouper methodology.
"People get caught on that all of the time," says Ms. Kehayes. "Make sure you request the mapping to the methodology. Unless they tell you it’s based upon Medicare — then the language needs to say it’s following Medicare’s mapping."
If it follows a different methodology, obtain the mapping and take, at least, your top 20 codes and make sure you understand their payment amounts, she says.
11. Keep CPT codes in the groups you agree to.
So you sign a contract which follows a grouper methodology. You’re happy with the reimbursement rates which correlate with each group. Several months go by and everything looks fine. Then, suddenly, one of your top procedures is reimbursed significantly less than you contracted. You call the payor and ask why this happened. That’s when you learn the payor moved that procedure’s CPT code from its original group into a group that reimburses less.
"You have to watch for contract language allows the insurance company to change the assignment of the CPT code to the group," says Ms. Kehayes. If they include this language, "they don’t have to renegotiate with you. They just have to send you a notice. They just say, ‘dear provider, effective Jan. 1, find our CPT mapping.’"
Unfortunately, announcements like these are sometimes thrown away because they appear to be updates that ASCs do not think apply to them, perhaps because their contract extends through this new date. But with language in the contract allowing grouper-placement flexibility to the payor, ASCs can find themselves in a bind,
It can be interpreted that, "You’ve agreed to (the new contract) once you cashed a check," Ms. Kehayes says. "It’s implied consent."
When this happens, it may warrant further discussion with a legal advisor.
12. Fight for GI and pain management
We’ve discussed some ways to encourage payors to follow the new Medicare payment system because it benefits many specialties, but some specialties are not so lucky, particularly GI and pain management. If your ASC performs cases in these specialties, which took a reimbursement hit with the movement to the new system, you will want to preserve the rates in the old payment system and use them as your baseline.
"You need to do your analysis and show the payors how much you are going to lose (by moving to the new rates) and you need to negotiate that conversion factor up," says Ms. Kehayes.
If you’re in a multispecialty ASC that performs GI and pain, along with some of the other specialties receiving a boost under the new system, and a payor is moving to APCs, you will want to split the conversion factor.
"What that means is you’re negotiating two different conversion factors for groups of codes," Ms. Kehayes says. "Because when you get into the APC world, you’re actually negotiating conversion factors just like you do for RBRVS (Resource-Based Relative Value Scale, the physician payment schedule for Medicare) for physician compensation.
While you can’t negotiate the relative weights, a measure that CMS uses to rank the costs of performing procedures in one APC as compared to other APCs, you can negotiate the conversion factor for APCs."Say to (the payors), ‘I want this conversion factor for this band of codes, and for this other band of codes, I want this conversion,’" Ms. Kehayes says. "They may tell you their computer systems can’t handle it, but I would push that argument hard."
13. Give yourself ample time to negotiate a contract.
To convince a payor that you deserve fair reimbursement usually requires patience and persistence. ASCs need to allow ample time to negotiate contracts or the consequences can be devastating.
"The one thing the doctors do not understand is that negotiating a big contract — let’s say their top three carriers — the time frame for that has probably gone to eight months or a year for a good contract," says Ms. Serbin. "I’m talking a lot of hard work, and no one seems to grasp that. And so they give up, they sign lousy contracts and they kill their center prematurely. It’s just out of the ground and they’ve signed rates they can’t make money on.
"Just how (the payors) are going to wear you down, you have to wear them down," she says. "I think that’s where everybody fails on the managed care piece. You have to have the stamina, the time and the staff to wear them down."
If you sign a bad contract, it is likely that you are going to violate our next tip.
14. Do not sign a contract that will cause you to lose money on procedures.
It’s not uncommon for an ASC to sign a contract that includes reimbursement rates that will actually cause it to lose money on some of the cases it performs. The reasons given can range from desperation to work with a new payor to conceding losses on some cases for gains on other cases. But if the contract you sign includes reimbursement rates that are too low to ensure a profit on cases you want to and will perform, you are likely doing more harm than you realize.
"I listen to doctors who say that it’s okay to lose money on certain cases," says Ms. Serbin. "I hear that time and time again. We don’t make enough money in any ASC to be able to do cases where we purposely lose money."
Consider the possible implication if the payor with which you contract is then acquired by another payor or has relationships with other payors. That poor rate you agreed to could become the limit that payors push you to accept in the future since you’ve agreed to it the past.
You can also expect the original payor you signed the contract with to be very hesitant in the future to consider moving much higher than that rate.
"You’re demonstrating to the payor that you can perform that surgery at that rate, so you lose your negotiating power," says Ms. Kehayes. "As soon as you start performing surgery with consistency on these cases and you try to tell the insurance company they’re not paying you enough, your actions speak louder than words. You have effectively told them that you can afford to do those cases."
You’re better off stating your arguments for why you can’t perform those cases and then do not perform them if you cannot get fair reimbursement.
"It’s really important that the ASC refrains from doing those cases if they cannot afford to do them, and communicate that to the insurance company," says Ms. Kehayes. "Keeping the cases you cannot afford to do in the ASC at the hospital sends a very loud message. This is what helps them to understand and see the opportunity of saving money by working with the ASC."
15. Give up those cases you can to get the procedures you really want.
Successful contract negotiations usually involve some compromises. The payor is not likely to give you everything that you request, so to get what you really want you must be prepared to give the payor a little of what it wants.
It is important to go to the negotiating table with a list of cases you really want to do — the cases that drive the financial stability and success of your ASC — and to be prepared to argue confidently and diligently for those you cases. You should also have a list of cases that you could perform in your ASC if the reimbursement was right, but would be willing to take less money to receive better rates on the cases that will make or break your organization.
"Sometimes a key doctor at a center will get fixated on one or two CPT codes that might represent five cases a year," says Ms. Kehayes. "It’s a give and take situation. Give up on the little cases to make the money on the big cases. Give up on the cases that represent a very, very small volume that don’t put the center at risk" if you stop performing them.
If you’re on a grouper methodology, you need to understand the distribution of your cases among the groupers and come to the table knowing which groupers are your most important and which are not.
For example, let’s say you’re in a traditional nine-group methodology; fifty percent of your cases are in group three; 2 percent in group one; 30 percent in group four; 10 percent in group five and nothing in group eight.
"Trade off the groupers that don’t have a lot of volume, such as groups one and eight, so you can focus on the groups that add more value," says Ms. Kehayes. "You can leverage that, but you have to understand where your distribution of cases is in their methodology. You should at least look up your top ten codes with each payment methodology."
You certainly want to have the data and arguments to speak to why you should receive excellent rates for all of the cases you could perform in your ASC, but understand in the back of your mind where you will give a little to the payor to hopefully gain a lot.
16. Use local government contracting trends to support your case.
If you are looking to strengthen an argument with a payor for why you should receive higher reimbursement using Medicare as a baseline, look no further than your local government.
In many states, Medicaid, the state workers’ compensation and even the state’s employee health plan are following the new Medicare payment system to determine their reimbursement rates. If you do your research and learn that this is true in your state, you can argue with your payors that these other major contracts view Medicare as an accurate and meaningful guide for what is considered a fair reimbursement baseline.
"People should determine whether your state’s wokers’ comp moved to it, has Medicaid moved to it — that’s all public information," says Ms. Kehayes. "In Washington, workers’ comp, July 1, went to a multiple of the fully implemented (Medicare payment system) — they didn’t do the transitional. The state plan is following suit and we expect Medicaid to move in the same direction in the very near future."
Finding this information should not prove difficult. Your ASC likely received notifications about any changes, although they may have been overlooked. Ms. Kehayes suggests a visit to your state department of health and department of labor of industries Web sites to learn about any contracts that have moved or plan to move to the new APC methodology.
17. Outsource your implants.
Some payors will work with you to arrange carve-outs for your implants, but you will likely contract with a few payors that will not. In those instances, you must choose to you can absorb implant costs and still make money on the cases; not perform the cases because implant costs make them unprofitable; or outsource your implants.
When you outsource implants, a separate company will purchase the implants for you to use and will obtain reimbursement from your payors after you use them, a strategy employed by Algonquin Road Surgery Center in Lake in the Hills, Ill., when it could not arrange carve-outs for some of its orthopedic and podiatry procedures.
"They take on the burden and responsibility, and they work with payor contractor and work out pricing and payment for the implant," says Ms. McGrath. "With most payors, and with shipping and taxes, we’re not often making money on the implants anyway, so at least this (arrangement) allows us to perform our cases."
Algonquin Road does not pay a fee for its service, so it is not sacrificing any part of the reimbursement it receives for the procedures by outsourcing. Unfortunately, there are instances in which outsourcing companies do not have a contract with a payor and, therefore, cannot purchase the implants for you. When that happens, you must determine whether you can still afford to perform the procedure on patients with this insurance provider or should send the cases to the hospital.
18. Ensure a new payment system-based contract transitions or ends.
If one of your payors is willing to base its contract on the 2008 rates of the new payment system, make sure the contract says the rates will follow the transitions so you do not remain stuck at 2008 rates.
"If they will not commit to moving with the transition of Medicare, then you either need an escalator that equates to the same amount or you need it to be a defined term so that it forces you into renegotiation, or you could effectively be falling below," says Ms. Kehayes.
Ms. Kehayes notes she asks for a 10 percent escalator to keep the rates close to the transitions if she cannot convince the payor to follow them.
19. Expect out-of-network coverage to initially be a trial-and-error process.
Receiving out-of-network reimbursement is becoming more and more difficult, says Ms. English.
"Not that we’ve ever necessarily been a proponent of it, but when you’re still trying to contract with somebody, or they won’t contract with you or they won’t give you decent rates, it’s become almost impossible now to do out-of-network," she says.
Payors are trying to come up with different ways to keep you from going out-of-network, says Ms. Serbin.
"Sending payments to the patients; giving you different discounts from being in-network; and different usual and customary (fees) applied to one set rules to in-network and one set of rules to out-of-network," she says. "If you can get them to tell you what their tactics are, this is good. But generally they won’t exactly tell you."
If you can’t find this out from the payor, you have to find another way to learn what happens when you go out-of-network, and the only way may be to perform just a few cases and monitor the results, says Ms. Serbin. In some instances, payors simply won’t reimburse you. In other instances, they may pay you or they may send the payment to the patient. Once you’ve learned the results, you can determine whether going out-of-network is worthwhile for your ASC or something to avoid entirely.
20. Prioritize up-front collections.
You should already have a strong policy and procedure for up-front collections in your ASC. If it is weak or non-existent, it is critical that you focus on the process, says Ms. Kehayes.
Payors are looking for higher premiums from employers, and employers are eager to keep premiums low. A mechanism for insurance companies to reduce premiums is to give more of the risk to the patient.
For example, let’s say a payor contracting with an employer has had the payor pay 90 percent of the allowed amount and expected 10 percent from the patient. The payor tells the patient’s employer that it wants a 20 percent increase in the employer’s premium and the employer asks how to decrease this premium.
The solution is to shift the burden of the premium to the patient, so now perhaps the patient has to cover 30 percent and the payor 70 percent.
If your ASC was able to negotiate a 10 percent rate increase with the payor but you have poor up-front collections, your cash can actually go down because you are receiving so much less from the payor and not collecting from the patient.
"You’ve negotiated a good contract but you’re not realizing the cash because your business office isn’t collecting from the patient up front," says Ms. Kehayes. "That trend is going to keep going because employers can’t afford 20 percent increases every year and that’s how employers are able to keep their premiums from going so high — by shifting their risk to the employee. You think you’ve negotiated this stellar increase, but unless your business office is doing the job up front, you may not see the money."
If you don’t collect money from the patient up front, you’re likely going to struggle to collect it after the procedure.
"Any billing company will tell you the probability of collecting after the fact than collecting up front drops immensely," says Ms. Kehayes.
Further, you could run into even more problems with up-front collections if you allow a clause in your contract that says you will not collect up front.
"I think you’d be remiss in your duty if you let that go through with that language in there because I don’t think it’s any of the payors’ business to determine whether you can collect from the patient up front," says Ms. English.
If your state law says you cannot collect up front, then the language would be acceptable. Otherwise, keep this clause out of your contract as this is an uphill battle you will want to avoid.
21. Educate self-insured employers.
An increasingly growing trend has insurance providers writing their plan designs in such a way that they are selling capped outpatient surgery rates to employer groups, observes Ms. Smallwood.
"In the benefit plan design, they’ll limit (for example) all outpatient surgeries to $1,200," she says. "Some are also saying that they will only follow Medicare’s rules for what is on the ASC-approved procedure list; if a CPT code is not on the CMS ASC list, then it cannot be done in an ASC setting — like spine.
"We’ve seen a lot of carriers writing that into their plan design, so it makes it difficult for out-of-network providers to get reimbursed for that," Ms. Smallwood continues. "I think you’re going to see health plans writing their certificates of coverage differently for their outpatient surgery benefit."
Education of employer groups about these limitations is crucial so the employers can decide whether this is the kind of restricted care they want to offer their employees. An ASC would be wise to reach out to the employers and serve as an informational resource.
"It’s going to be important for ASC leadership and governance to talk to the self-insured employers in their area — the large employer groups — to make sure they understand that when they buy a consumerdriven health plan PPO that it may not be a PPO because they capped a specific site of service or restricted it based on reimbursement limitations," says Ms. Smallwood.
It is also important for the front office of an ASC, when scheduling a patient, to confirm whether the patient has a capped outpatient surgery rate.
"Ask, ‘What is the allowable amount for this procedure?’ If they just asked that one more question, they would determine that it’s capped at $1,200 when [the patient is having] a $2,000 procedure," says Ms. Smallwood. This question could make the difference between performing a procedure for a loss and, perhaps wisely, sending the procedure to a hospital.
22. Don’t blindly stay with a clearinghouse
If you work with a clearinghouse and are not satisfied with its results, consider looking into alternative clearinghouses. The decision to make a switch was critical for Goshen (Ind.) Ambulatory Care Center
"Probably the most important step we have taken lately was to change clearinghouses," says Deborah Starnes, administrator at Goshen. "Reimbursement has been much faster. We can go online and know the status of our claims at all times, and do not have to wonder whether or not our claims have been received by the payer. Rejected claims can be corrected online and quickly resubmitted. This change has been positive on our accounts receivable."
Goshen made the change when its software vendor reported problems with the original clearinghouse and suggested switching to one its preferred clearinghouses.
23. Watch out for evergreen clauses that lock in your rates.
If your contract includes an evergreen clause, you may think that the contract doesn’t expire and will just rollover to the next year. While this is may be true, the problem is that the rollover often does not include a rate boost, thus leaving your reimbursement stagnant for another year.
"If you let it roll at the same rate, you can then lose the opportunity to negotiate again for another year depending upon what their clauses say," says Ms. Kehayes. Make sure the payment terms include an annual escalator. If they are following the "current" Medicare ASC methodology, it might be advantageous to includes language indicating the rates will be adjusted in accordance with the transitional payment percentages with the system. Of course, this is assuming that the case mix of the center result in a favorable increase by converting to the new payment methodology, she says.
"Surgery centers leave money on the table [with such an oversight]," she says. "The ASC has a responsibility and has to take accountability for calling the insurance company on a regular basis for increases. Have a reminder notice going off three to six months before their contracts are up for renegotiation and, at a minimum, they need to ask for 4 to 5 percent each year to keep up with the Consumer Price Index."
24. Review termination clause language closely.
If a proposed payor contract includes a termination clause, you will want to closely scrutinize its language before agreeing to the terms as you may be limiting when you can and cannot terminate the contract.
"You have to look at your notification and termination clauses — there’s a difference between a termination clause with an anniversary date versus one that doesn’t have an anniversary date," says Ms. Kehayes. "You can have a contract that says you can give 90 days notice at any time versus another clause that says you can send notice only 120 days before the anniversary date, and if you don’t do it at that time, the contract automatically rolls on the same rates for another year.
"Look for anniversary date language that may limit your time period for providing notification to the payor on renegotiation and/or termination of a contract," she says. "You can get yourself locked up for another year, and sometimes it says it rolls for another two years."
25. Put physicians to work.
If the responsibility of negotiating your ASC’s contracts falls solely on the administrator, this is a process to seriously reconsider.
"Shame on the center that allows the administrator make that unilateral decision, and shame on the administrator for doing it," says Ms. Serbin.
Your ASC’s board of directors should review any contracts to help identify areas of concern and prevent bad contract signings.
"They know the ins-and-outs of the contracts, and they can help make educated decisions," Ms. Serbin says.
You can take their involvement one step further — bring them into the contract negotiations.
However, make sure you’re bringing the right voice and personality into the process.
"We’ve primed physicians with what to say and then had them call up to the carrier and chat about the disappointment in the negotiations and the rates, and (the payor) takes a little bit of a different tone when they’re talking to a doctor," says Ms. Serbin. "But the caution there is that if you know the doctor is a screamer, a yeller, a not-nice-on-the-phone type, that wouldn’t be the doctor to have call as I’ve also seen where physicians can hurt that process. But if they can get on the phone, not lose their temper and talk intelligently and sort of woo them over, that works a lot."
26. Take a proactive approach to claims accuracy.
Even the smallest error on your claims can lead to a denial and delayed payment. The good news is that the information you need to fill out your claims is available to you. You just need to seek it out, and do so on a regular basis as it can change regularly.
"When I was on the third-party payor side, one of the biggest frustrations for us was the education of the business office staff," says Ms. Smallwood. "They need to be proactive in going out to the National Uniform Billing Committee (NUBC) and pulling down its instructions. Before they even submit their claims, they need to be accountable and just make sure their system libraries are mapping to the correct form blocks."
In some cases, a payor’s requirements will differ from the NUBC, says Ms. Smallwood. Assigning someone on your staff to visit to all of your payors’ Web sites quarterly to look for any changes is a wise decision.
"Those instructions are out there on all of the payors’ Web sites and they even have example forms and definitions," she says. "You can’t just check them this year and leave it in place forever. Assign a specific staff person that is accountable for reviewing that information and updating that system. Office managers often think the software vendors are responsible for making changes to their electronic billing or their libraries, and they’re not."
What’s the harm in missing a change? Consider that, this year, Maryland’s workers’ compensation changed the way it’s reimbursing its claims, having moved to the Medicare guidelines and a grouper system from a system based on a percentage of billed charges.
"Had we not constantly been out there looking at our payors on a quarterly basis, we never would have known that," says Ms. Smallwood. "Our claims would have went in, they would have been denied and it would have taken 90 or 120 days to get that cash, so it would have seriously interrupted cash flow."
In addition to visiting the payors’ Web sites regularly, make sure someone is watching your mail and e-mail closely and reviewing anything that could serve as notification of a pending change.
27. Watch for secondary (complimentary) payor tactics.
Ms. Starnes says Goshen Ambulatory Care Center recently faced a situation where it had contracted with a payor and believed it was contracting for a primary network. Then Goshen learned that the payor was functioning as both a primary and secondary (complimentary) network.
"The payor was applying the secondary network discount and also the out-of-network discount, resulting in a ‘double dip’ situation," says Ms. Starnes. "There was no advantage for us to participate in this kind of arrangement and we have since terminated these contracts."
Unfortunately, the networks that are conducting this practice do not represent themselves as secondary networks during contract negotiations, Ms. Starnes says, so you will want to closely monitor new contracts to ensure you do not run into a similar situation.
Contact Rob Kurtz at rob@beckersasc.com.
