Employers are increasingly exploring direct contracting options for orthopedic care, which can provide an additional revenue stream for ASCs as commercial payers continue to reduce reimbursement rates and narrow their networks.
During Becker's 18th Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference, four experts discussed challenges related direct-to-employer contracting and how this trend will develop in orthopedics.
Below is an excerpt from the conversation, slightly edited for clarity. To view the full session on-demand, click here.
Note: Responses are lightly edited for style and clarity.
Question: How should ASCs approach direct-to-employer contracts as employers increasingly look to surgery center partnerships for spine and orthopedic care?
Nader Samii. CEO, National Medical Billing Services: I think direct contracting with employers will be a key part of the future. Employers do want it, and there's a cost savings. The patients want it — there's a convenience and a cost savings from their perspective. The payers may not want it. It sort of cuts them out a little bit, although they tend to be involved in the administrative processing component of it, so there's still revenue there.
To attack this, you have to have a systematic approach laying out. It's almost its own business model. You better really think about what you're offering. So, for a provider going to a big employer, what are the services we're offering? What are you taking to them? What services, what specialties, physical locations and delivery of care options are you providing to them? What's that pricing look like? Obviously, that's really critical. That's driving the discussions of convenience, pricing and cost savings as it relates to the patients and what the patient is saving as well.
And who's getting paid? For this to be effective, you need the providers to have a good model. You need each of the individual riders that make up those different components to make sure that it's enticing economically for those people, as well as for the patients and employers. You'll get some of the big companies — the Walmarts, BMWs and GMs of the world — that have done some of these deals, but you've got to go deeper to see what each of those entail. I think we're at the very early stages for everyone, even for the big players.
Jon Van Valkenburg. Executive Director, Upstate Orthopedics Ambulatory Surgery Center (Syracuse): I think in order to do it, ACS would need to work with surgeons and groups to approach large employers and establish the relationships. The challenge there is that these employers know what they're spending on their medical care for their employees, but they probably don't know what they're spending on orthopedics? We know that we can bring value and we know that we can save them money, but in trying to approach them and negotiate these things, it's very hard for us to quantify what we're going to save them when we don't know what they're spending on orthopedics, and they probably don't even know what they're spending in orthopedics.
Meredith Warf. Administrator, The Surgery Center at Mississippi Sports Medicine (Flowood): In the Southeast, we do have some of these direct-to-employer deals. The employers actually approached the providers to put that in place. I mentioned the relationship with our payers that we work hard to maintain, and that's a fine line to walk. You don't want to tarnish that relationship and trust that you have with your payer. But at the same time, this is such a great opportunity for surgery centers and for employers, because they're looking to cap costs in certain areas of their healthcare spend — orthopedics, and maybe even a subset of orthopedics like arthroplasty surgery, where we know what that's going to cost. Maybe it's not every shoulder scope or spine surgery, maybe it's just total joints, or just carving out a section of that service line where we can offer a bundled price for all the treatment to get that employee back to work. That's the way we focus on it here.
The patients love it as well, because they don't have to pay their deductible, copay or co-insurance. All of that is included in that voucher. Our revenue cycle loves it because it's not a matter of following up on claims. It's already done; it's arranged ahead of time. So, the ease of administration is a huge plus that's worth all these things we deliberate on to quantify the value that can be provided to figure out how the administration works. Fast forward five years, and I really do believe this is a lot bigger in the space of orthopedics and spine, and perhaps other service lines.
Harel Deutsch, MD. Co-Director, Rush Spine Center (Chicago): We've been involved with some of the big corporations that have come to us. It's a complex issue. On the one hand, the companies are not so price sensitive. They really want their workers to be back to work and have good outcomes, so it's not necessarily about price. It's more about are these people getting the right surgery? Are they going to have a good outcome and be back to work? But then there's the other issue with these big companies is that their employees are all over the place. As part of this, I operated on someone who flew from Houston to Chicago to have surgery through one of these programs. But that's the problem. Patients are going to want to go more locally. Not all patients want to travel to have a better outcome or surgery, so it's difficult for the employer.