Former President Barack Obama signed the ACA into law in 2010 in the face of great support and opposition. Repeal efforts have thus far been unsuccessful, although the Trump administration has made ACA repeal and replacement a main focus. Legislators are now considering multiple plans to revise the U.S. healthcare system, which will affect ASC revenue cycle management.
On Oct. 19, National Medical Billing Services Vice President of Clinical and Regulatory Affairs, Kylie Kaczor, RN, MSN, presented a webinar titled "Regulatory Affairs and the Revenue Cycle: What to watch for in the ASC Industry," hosted by Becker's Hospital Review and covered key legislative initiatives in healthcare and how they could affect ASCs. The tenor of the healthcare debate on Capitol Hill is constantly changing, with the most recent actions including:
• Graham-Cassidy bill, which would end Medicaid expansion in 2020, convert Medicaid subsidies into a block grant program and award $1.2 trillion to states through 2026.
• President Donald Trump's executive order to discontinue cautionary reduction funding that provided subsidies to insurance companies under the ACA and promoted choice and competition in the healthcare industry.
• Alexander-Murray bill, a short-term bill developed by a bipartisan coalition of 12 Republican and 12 Democratic senators that appropriates cautionary reduction funding to support subsidies for insurance companies that cover low-income consumers through the ACA and allows insurance companies to provide less comprehensive plans to all consumers.
• Former HHS Secretary Tom Price, MD, resigned from his post Sept. 29, which is seen as a loss for the ASC industry due to Dr. Price's background as an independent orthopedic surgeon and ASC owner.
The Senate vote on the Graham-Cassidy bill scheduled Sept. 27 was canceled due to opposition, but the bill could provide a window into where future legislation is headed. "Understanding that healthcare reform was a very major — if not the major — platform that President Trump and many Republicans ran their campaigns on, we recognize the efforts won't stop here," said Ms. Kaczor. "Since the vote on the Graham-Cassidy bill was canceled, President Trump has announced that he plans to work with Senate Democrats on a bipartisan reform in 2018."
Most of the recent healthcare legislative efforts focus on Medicaid funding and access to affordable insurance plans, which could affect ASC revenue cycle. The changes to Medicaid will not have a direct impact on ASCs, but changes to healthcare reform could. High-deductible health plans became more common under the ACA, making the patient financially responsible for a larger portion of their care.
"If nothing changes, we can expect these trends and challenges associated with [high-deductible health plans] to continue. What happens if proposed reform passes? It could create limited coverage or loss of coverage for some individuals, which could then turn into lower patient volume for providers or even higher costs associated with a higher uninsured rate," said Ms. Kaczor. "In today's environment, you absolutely have to view the patient as a payer. We've seen an 83 percent increase in employee contributions over the last decade — that is absolutely significant in our market."
There is a growing focus on patient responsibility, and healthcare providers are aggressively collecting from patients. The American Medical Association reports patient responsibility has reached around 25 percent of revenue, and providers report an increase in self-pay patients that could lead to significant bad debt for providers. From 2015 to 2016, the number of consumers failing to pay medical providers increased 15 percent, a trend likely to continue.
"As a result, we are seeing a growing focus on collecting patient responsibility and appropriately estimating time of service cost for patients. Facilities and practices are also exploring where their inefficiencies and wastes lie and are progressively working to cut costs while maintaining quality and care," said Ms. Kaczor.
Rising costs force organizations and practices to become as lean and efficient as possible, leading to the use of automation within the revenue cycle. Managed care contracts are also becoming more complex, and states are increasingly adopting legislation to address price transparency for healthcare services. Twenty-five states have some type of cost reporting, time of service estimation or healthcare price data accessibility requirements in their legislation.
"In Oregon, for instance, the new state legislation will prevent healthcare providers from sending patients to collections in the event that a healthcare insurer will not pay on a claim where they are out-of-network providers," said Ms. Kaczor. Based on state legislation, ASCs could see loss of patient volume and additional administrative costs.
Ms. Kaczor touched on six key trends during the webinar, offering insight and expertise on the biggest factors affecting ASC revenue cycles today.
1. Self-funded plans: Current HHS data shows 82 percent of large employers — companies with more than 500 employees — choose self-funded plans, and 29 states cover all state employees under self-funded plans. As a result, these plans are becoming a larger portion of an ASC's payer mix and large employers are gaining a significant voice in the healthcare industry. "We're actually suggesting the industry adopt a new payer class that's labeled self-funded so that we are able to properly track these plans and the employer groups for reporting purposes," said Ms. Kaczor.
With the proliferation of self-funded plans, managed care companies are tightening the language of their contracts with regards to their narrow networks.
"Managed care organizations are including language restricting your ability to directly contract with employer groups," said Ms. Kaczor. "Depending on your market, that could be a profitable arrangement for you. They are doing this because they are viewing you now as competition when you are directly contracting with an employer group, and they see this as you taking away some of their revenue. Be sure to ask who the employer groups are in your area and what do your contracts dictate about contracting with employer groups; these are going to be very important questions for you to ask when you're reviewing your contracts and addendums today."
2. Specialty products: Specialty products and payment responsibility language in managed care contracts make it extremely important for ASCs to understand their patient population.
"Specialty product language gives a payer the right to exclude your participation in a specialty program, which could result in the loss of patient volume to their plan's preferred providers," said Ms. Kaczor. "It could also result in unpaid claims because your physicians are not credentialed into that narrow network. The managed care organizations are also including language that reserves their right to include your participation in their narrow networks, and while this can have a positive impact by driving volume to your facility, if you're not carefully negotiating your contracts and understanding this language you could end up with contracted rates in the narrow networks that are actually lower than your standard rate with the managed care organization."
3. Bundled payments: Bundled payments assign cost to the entire episode of care, and the system is expanding into the ASC space. Almost all — 97 percent — of health plans and hospitals are using a complex mix of fee-for-service and value-based reimbursement, and bundled payments are expected to account for 17 percent of reimbursement in the next five years.
"Bundled payments really are not new — they've existed in the hospital space for many years — however, they are now applying to procedures in the outpatient setting in an effort to support cost containment," said Ms. Kaczor. Managed care companies offer bundled outpatient services and may require that every provider involved in providing a bundled procedure be contracted with their network. It's the ASC's responsibility to understand their payer contracts and addendums to ensure bundled rates won't negatively impact the center's bottom line.
4. CMS proposed 2018 Hospital Outpatient Prospective Payment System and ASC Payment System proposed ruling: CMS released the 2018 OPPS proposed rule in July, with comments open through Sept. 11. The final rule could be released any time over the next few weeks, finalizing the fee schedule for next year.
CMS proposed a 1.9 percent increase in ASC payment rates for facilities that meet quality reporting requirements, as well as moving total joint replacements to the ASC payable list and examining the potential for moving partial and total hip replacements to the ASC as well.
"While we are excited to see this migration of total joints to the ASC approved list, there are some in our industry who are anxious to better understand what the reimbursement for these procedures will look like through CMS," said Ms. Kaczor. "I think a valid concern is that reimbursement rates will not properly reflect the cost associated with providing this care in the ASC setting, even though there is a significant cost savings when compared with these procedures in the hospital or hospital outpatient department, and as a result the worry is that it could lead to an inverse migration of procedures going back into the hospital setting because the ASC would not be able to afford performing them."
The proposal also delays OAS CAHPS payment adjustments based on quality metrics for another year.
5. ASC payments: ASC industry advocates are lobbying lawmakers to support the ASC Quality and Access Act, which would move the ASC inflationary index from CPI-U to the hospital market basket, or a similar rate increase. The legislation would also require CMS to:
• Post comparable metrics between ASCs and HOPDs
• Add ASC representation to the advisory panel for outpatient payment updates
• Provide the reason for excluding procedures from the ASC payable list
Under the CPI-U, ASC reimbursement increases have not kept up with the rising cost of performing those procedures at an ASC. As a result, procedures such as knee arthroscopy are experiencing a reverse migration back into the higher cost hospital setting.
6. Cardiology: Surgeons are beginning to perform cardiac procedures in the ASC, including pacemaker placements, pacer wire/battery charges, PCATH, catheterization with stent placements and venous low-risk ablation. These procedures are device intensive and present similar challenges for ASCs as other device-intensive procedures. However, cardiology is considered a growing outpatient specialty.
"Because this is still so new and rapidly moving, at this point collective data on quality and cost is not readily available, but what we do know is coding will be the focus here. You really need to have specialized coding done by cardiac coding experts because of the rapid movement of this specialty," said Ms. Kaczor.
Conclusion
The healthcare market is quickly changing and legislative reform remains in flux, which will have an impact on the ASC's ability to operate and remain profitable. It's crucial for ASC owners and operators to remain knowledgeable about state laws and regulations, and operate their revenue cycle accordingly. "Growing demands for price transparency, accurate coding and billing, and contract management are really key areas to support a healthy revenue cycle," said Ms. Kaczor.
To view the webinar recording, click here.
To view the webinar slides, click here.