In a presentation at the 9th Annual Orthopedic, Spine and Pain Management-Driven ASC Conference in Chicago on June 9, Thomas J. Bombardier, MD, FACS, principal and founder, ASCOA, discussed considerations for ASCs in regards to whether in-network or out-of-network status makes better business sense.
Dr. Bombardier says that centers must determine if profits will be higher if the center accepts the contract or not. While this may sound fairly simple, it is actually somewhat challenging because it requires accurate case costing. That is, to determine profit per case, centers need to add together the total cost of supplies and labor for the case and subtract that from reimbursement.
Profit per case x total cases
To examine if profits will increase by accepting a contract, centers must multiply the profit per case by the total cases expected if the center is brought in-network. If this number is higher than the profit per case times current cases as an OON center, the center may benefit from entering into the contract due to the increased demand the contract will drive to the center.
Mitigating factors
While some centers may experience higher profits OON, there are a number of mitigating forces that centers should consider before making deciding to stay OON. Increasing deductibles for out-of-network services are increasing, which will drive down patient demand for OON services. Dr. Bombardier said he has seen OON deductibles as high as $10,000 in one market. Additionally, some insurers are sending checks for OON services directly to patients as opposed to centers as well as warning patients of increased costs associated with out-of-network services.
Negotiating with insurers
Dr. Bombardier says bluntly, "Out-of-network is going away." While OON centers may be able to profit in the near future, they will eventually have to contract with payors to be successful. When they begin this process, it's important they negotiate inteligently with insurers. He points to a center that more than doubled the reimbursement per case initially offered by an insurer after eight months of negotiation.
Dr. Bombardier says that centers must determine if profits will be higher if the center accepts the contract or not. While this may sound fairly simple, it is actually somewhat challenging because it requires accurate case costing. That is, to determine profit per case, centers need to add together the total cost of supplies and labor for the case and subtract that from reimbursement.
Profit per case x total cases
To examine if profits will increase by accepting a contract, centers must multiply the profit per case by the total cases expected if the center is brought in-network. If this number is higher than the profit per case times current cases as an OON center, the center may benefit from entering into the contract due to the increased demand the contract will drive to the center.
Mitigating factors
While some centers may experience higher profits OON, there are a number of mitigating forces that centers should consider before making deciding to stay OON. Increasing deductibles for out-of-network services are increasing, which will drive down patient demand for OON services. Dr. Bombardier said he has seen OON deductibles as high as $10,000 in one market. Additionally, some insurers are sending checks for OON services directly to patients as opposed to centers as well as warning patients of increased costs associated with out-of-network services.
Negotiating with insurers
Dr. Bombardier says bluntly, "Out-of-network is going away." While OON centers may be able to profit in the near future, they will eventually have to contract with payors to be successful. When they begin this process, it's important they negotiate inteligently with insurers. He points to a center that more than doubled the reimbursement per case initially offered by an insurer after eight months of negotiation.