Ambulatory surgery centers often struggle to obtain sustainable rates from payers to not thrive, but survive in the competitive healthcare landscape. As CMS begins implementing reductions on high volume codes, many commercial payers will take its lead, which may have steep repercussions for ASCs fighting to stay profitable.
At Becker's 14th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine, Naya Kehayes, principal and ambulatory surgery practice leader of Seattle-based Eveia Health, a division of ECG Management Consultants, and Matt Kilton, senior manager and director of ASC services of Eveia Health, discussed how Medicare's reimbursement decisions will impact commercial payers' rates and reimbursement methods , and crucial negotiation strategies for surgery centers in a presentation titled, "The changing healthcare environment, implications of Medicare, and impact on commercial payor contract negotiations for spine, orthopedics and pain management."
Paying attention to CMS methodology changes
This year, CMS removed various orthopedic devices from the device intensive list, which Ms. Kehayes said, "had a significant impact on reimbursement."
Ms. Kehayes used CMS data to illustrate which procedures CMS added substantial reductions, including various spine and shoulder procedures that are implant intensive. For example, CPT code 22851, the application of intervertebral biomechanical devices to vertebral defect or interspace, was included historically on Medicare's paid list. However, CMS changed the code to a spine-add on for 2016.
"When you have big reductions with surgical procedures that have implants and it is an all-inclusive rate, you have to pay attention to how that will translate to the commercial payers," Ms. Kehayes said. "It is very important to understand what is happening when the government changes the methodology. It has a tremendous impact when there is no reimbursement."
Surgery centers should also pay attention to payer trends in the hospital outpatient setting, as the government will try various methodologies in HOPDs before transitioning the changes to ASCs, Ms. Kehayes explained.
Negotiation and payer strategies for ASCs
ASCs looking to negotiate with payers on approved codes have several considerations, including:
• Payer due diligence. What are the payers' interests? What will be their methodology for moving cases to the ASCs?
• Relationship between hospitals and payers. Payers may not move cases to the ASC if it is detrimental to their hospital relationship. "It is often a business decision payers will make and centers can't ignore that," said Mr. Kilton.
• Market variations. Consider the underlying dynamics shaping your market.
• Contract terms. ASCs should assess whether they are in the middle of a contract term and whether the payer will change the contract.
When negotiating adding procedures to the approved payer list, ASCs also have to weigh the opportunities and risks, so they can leverage certain information. For instance, ASCs may be better able to negotiate when the Outpatient Prospective Payment System is greater than the commercial payer methodology. On the other hand, Medicare's add-on codes may often translate to commercial payer payment policies, so ASCs should be fully aware of the packaged add-on codes.
To come out of payer negotiations with the desired goal, surgery centers should answer some key questions, such as whether the payer follows CMS, or does the payer have its own payment policy rules for add-on codes. Additionally, surgery centers should consider whether the payer contract methodology is based on a Medicare percentage.
Mr. Kilton explained ASCs should present information to sufficiently "sell themselves to the payer." ASCs can detail hospital volume that is ASC eligible, thereby presenting payers a substantial cost-saving opportunity. ASCs should also present their implant costs, which codes will be billed, market dynamics and a list of their physicians.
"Only you can sell yourself as you do," Mr. Kilton said. "It is critical to hand payers this information in a presentation format."
Taking the payer medical director into account
During negotiations, some payers may require a payer medical director review. Thus, ASCs should present certain information such as protocols for patient selection, discharge criteria and journal articles proving ASCs' safety and efficacy to the payer medical directors.
"If you are a trailblazer in your market, such as centers doing new procedures like cervical disc replacement, it is important to establish a relationship with a payer medical director," Mr. Kilton said.
As surgeries continue to move to surgery centers, ASCs will take on higher acuity cases, and hospitals are gradually seeing the opportunities ASCs present. Therefore, payer alignment is essential, and surgery centers should continue to educate payers about ASCs' high quality and cost-effectiveness.
"Once medical directors and payers work with physicians in the ASC setting and see favorable outcomes and safety of providing the procedure, they will give the green light," said Ms. Kehayes.
"Commercial payers are aligning with ASCs to move cases out of hospitals so they can reduce cost which helps to control premiums."
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