2023 Payer Trends: Navigating Advanced Payment Models

In today’s rapidly evolving healthcare landscape, ambulatory surgical centers (ASCs) are facing new payer trends that are reshaping the way they are reimbursed for their services.

One of the most significant is the move towards value-based care through a number of alternative payment models, or APMs, that focus on the quality and outcomes of care rather than the volume of services provided. As this trend gains momentum, ASCs will need to adapt their strategies and operations to succeed. In this article, we will explore three of the more prevalent APMs including Commercial Outpatient Pricing Payment System (COPPS), Enhanced Ambulatory Patient Grouping (EAPG), and bundled payment programs, and discuss how ASCs can navigate these new reimbursement methodologies in 2023 and beyond.

COPPS
COPPS, one of the newer APMs for outpatient facilities, is becoming popular in many states. Similar to the OPPS based reimbursement methodology under Medicare, COPPS reimbursement is structured to promote more consistent billing on outpatient services to cut costs on the payer end. This transition could potentially change the reimbursements ASCs have previously negotiated. To best prepare for the COPPS roll-out, ASCs should be knowledgeable of their existing contracts and profitability. It’s important to review cases and understand the code combinations for each case to analyze what will be affected by COPPS.  Be sure to prepare this data now so you can review payer rates on current and future cases to know what might affect your bottom line.

EAPG
The EAPG system, developed by 3M, calculates reimbursement for outpatient services by classifying resources used in various visits and determining reimbursement based on services provided. The EAPG system classifies services into Significant Procedure, Medical Visit, and Ancillary Service categories, and the rates for each facility are determined by multiplying the appropriate EAPG weight. The system also applies discounts for multiple significant procedures, bilateral procedures, and repeated ancillary services to ensure that both low- and high-cost services are reimbursed appropriately. However, the reimbursement amount might vary based on the resources required for each visit, which can potentially affect ASC revenue. ASCs should understand the EAPG classification system to ensure accurate and proper reimbursement for their services.

Bundled Payment Programs
Bundled payment programs are continuing to grow with outpatient commercial and government payers. As with any APM, it’s important ASCs understand the financial impact and structure of the bundle. Traditional models typically involve paying ASCs on a fee-for-service basis, where each service is billed separately. In contrast, bundled payments involve paying ASCs a lump sum for a bundle of services related to a specific condition or procedure. Bundled models are intended to improve care coordination and reduce costs by incentivizing providers to work together and avoid unnecessary procedures. For ASCs, this means that they will need to be prepared to manage costs and work closely with other providers. They will also need to be able to demonstrate the quality and outcomes of care they are providing to patients to be reimbursed for services. For example, will the bundle include a global period and, if so, what services will be included. It’s important to note bundle payment programs are active within government programs as Medicare’s Innovation Center continues to develop new APMS such as BPCI (Bundled Payments for Care Improvement program). The Centers for Medicare and Medicaid Services (CMS) noted that as of January 1, 2022, over 11 million people with Medicare received care from a health care provider in a Shared Savings Program ACO, which was up 324,000 (3%) from the previous year. However, the total number of patients enrolled in bundled payment models is likely much higher, given the fact that there are many other CMS bundled programs (including Medicare Shared Savings Program, the Next Generation ACO Model, and the Comprehensive Care for Joint Replacement Model) as well as similar programs being implemented by commercial insurers and employers.  

Overall, these three payer trends represent a shift away from the traditional fee-for-service model of reimbursement. The impact of value-based care APMs on the outpatient industry will depend on a variety of factors, including the specific terms of the payment model, the ASC's ability to deliver high-quality, cost-effective care, and the reimbursement rates offered by each payer. Ultimately, ASCs will need to carefully evaluate the potential benefits and challenges of participating in APMs in order to determine whether the terms are a good fit for their surgical organization. Therefore, when encountering any APM, ASCs should:

1. Understand the details of each payment model: Each model has its own specific rules and requirements. ASCs should familiarize themselves with these details and ensure they are in compliance.
2. Develop a strategy for managing costs: This may involve implementing cost-saving measures, such as reducing waste and inefficiencies.
3. Build relationships with key stakeholders: ASCs should build relationships with employers, payers, and other facilities. These relationships can help ASCs understand the needs and priorities of these groups and can also help ASCs position themselves as valuable partners.
4. Invest in technology and data analytics: This will identify areas for improvement and demonstrate their value to stakeholders.
5. Focus on quality and outcomes: Under value-care payment models, ASCs will be rewarded for improving quality and outcomes. ASCs should focus on delivering high-quality care and on achieving positive outcomes for patients.
6. Stay informed: It’s important for ASCs to be apprised of the latest developments in these payment models and in healthcare reform in general so they can adapt as necessary.

Knowing the details behind each payer’s methodology is critical for ASCs to ensure rates are accurate and fair for each procedure, especially since payment is based on the outcome of the surgery. Under value-based care contract terms, ASCs represent one component within a patient’s total episode of care. Understanding your facility’s role within that episode of care will help you determine what you’ll be paid, when you’ll be paid, and what your facility’s responsibility is to each patient.