Narrow networks, bundled payments and consumer demand for price transparency are affecting reimbursement. It is critical to understand these rapidly emerging concepts, otherwise, surgery centers may be missing opportunities to optimize payment and enhance their bottom line.
The primary driver of ASCs' changing reimbursement landscape is cost-containment, Nader Samii, CEO of St. Louis-based ASC revenue cycle outsourcing provider National Medical Billing Services, said during a company-sponsored webinar June 15. Third-party payers and other entities implement cost-containment strategies, such as narrow networks and value-based payment models, to manage the rapidly escalating healthcare costs. These models can challenge ASCs' financial stability, however, as they tie reimbursement to payer contracts and health outcomes.
To protect their financial footing, ASCs must be prudent in determining if patients are covered under narrow network plans or other cost-controlling initiatives like total joint replacement bundled payments. Many ASCs lack the in-house expertise required to evaluate their reimbursement strategy and may need to consider tapping companies with data analytics tools and industry insight to help them excel, Mr. Samii said. Knowing a patient's insurance status prior to administering care allows ASCs to create a reimbursement strategy that positively affects their financial standing.
Here are three cost-containment trends affecting ASCs — and what centers can do to successfully manage them.
1. Tiered narrow networks
Narrow networks such as health maintenance organizations, managed care organizations and centers of excellence are growing into the most common method of healthcare cost containment, Lisa Rock, president of National Medical Billing Services, said during the webinar.
One narrow network trend increasingly affecting ASCs is tiered network plans, which often direct policyholders with employer-sponsored plans toward specific providers by offering lower deductibles and coinsurance. If an ASC is losing volume, Ms. Rock said it needs to be aware people may be seeking treatment at higher tiered providers.
"Many providers don't know they're in a tier or don't know they're excluded from a tier," Ms. Rock said. ASCs must train staff to be aware of tier designations and run an eligibility report to determine which patients are in tiered health plans. Staff must also be prepared to determine patients' ultimate financial responsibility based on tier, as greater price transparency upfront will increase likelihood of payment.
"This is a lot of work on the front end, but it's more important that you do it yourself," Ms. Rock said. "I know many surgery centers in the past relied upon the information from the surgical practice to do this — I would not advise that today in this environment."
Ms. Rock added ASCs should check for language in their payer contracts alluding to whether they are in a tiered network. Mr. Samii underscored the importance of doing so since narrow networks often lead to lower reimbursements, or may necessitate additional credentialing requirements and ratings to get paid.
"I think over the next few years we're going to see an increase" in credentialing and quality ratings used to determine narrow networks, he said. "It's important to be proactive and understand where you're rated and what you need to do to make sure that you're rated appropriately so it's beneficial from a business standpoint."
2. Outsourced bundled payment companies
Bundled payments are one of the fastest growing value-based payment models and will account for 17 percent of all reimbursement in the next five years, according to a study conducted by ORC International and commissioned by McKesson Health Solutions.
Ms. Rock said one bundled payment method that is gaining traction nationwide is employers and large payers outsourcing high-cost surgical cases to firms specializing in bundled payment management. Contracts between ASCs and major insurers could include third-party agreements with such outsourced bundled payment companies. This means an ASC has agreed to accept payment for bundled ASC services from an outsourced company at rates that may be lower than its contract with the national insurer. It also means ASCs have to contract separately with the outsourced firm and every provider taking part in the episode of care.
If ASCs fail to notice this language and do not contract with the outsourced bundled payment companies, their reimbursement could fall to a much lower default rate, such as 90 percent to 110 percent of Medicare, according to Ms. Rock. She added ASCs should check this information every couple of months, as agreements between payers and outsourced bundled payment companies could change with little notice.
3. Self-pay patients
The volume of direct consumer payments to providers increased 58 percent from 2013 to 2016, according to InstaMed's "Trends in Healthcare Payments Seventh Annual Report: 2016."
"The patient is now the payer and is a very important financial class," Mr. Samii said. "Patients today are shopping. They have to be informed consumers."
Consumer demand for price transparency has spurred states nationwide to pursue laws that prevent surprise billing. The California Health and Safety Code, which was approved in September 2016, calls for out-of-network providers at in-network facilities to treat patients as if they are in network. In similar cases, the bill also states insurers can pay the average reimbursement for in-network treatment or 125 percent of Medicare.
While this leaves the patient and payer protected, providers often end up stuck with less reimbursement, Ms. Rock said.
In addition to pressures from surprise billing legislation, the rise of healthcare consumerism means ASCs must be prepared for increased patient awareness about the cost of care.
"It's important to have staff who are very well-versed, knowledgeable, patient-friendly and can communicate these points," Mr. Samii said. "If done correctly, it can be very positive experience."
However, many ASCs do not have the level of sophistication required in their billing department to deal with the complexity in cost-containment trends induced by consumer demand for price transparency, bundled payments and narrow networks. As a result, many have enlisted companies with complex analytics tools and skills for support, Mr. Samii said. National Medical Billing Services leverages its expertise in ASC revenue cycle management and advanced data capabilities to help optimize reimbursement for centers.
Mr. Samii added the changing reimbursement landscape "is here to stay." Therefore, tapping a resource to analyze these cost-containment trends will allow ASCs to strengthen their adaptability — and success — in the changing healthcare landscape.
To view a recording of the webinar, click here.
To access the webinar slides, click here.