1. Take advantage of transparency
With a little bit of research, you can determine the baseline for what hospitals in your area are receiving for the procedures you want to perform.
“Go through the payor Web sites or CMS,” says Elizabeth Smallwood, CMPE, vice president, contracting and reimbursement, for Blue Chip Surgical Center Partners, and a former director of contracting for Humana of Ohio, with experience working for Aetna, and Anthem Blue Cross and Blue Shield.
By visiting the payor Web sites, you can enter location information (zip code) and estimate how much the hospital receives for these procedures. Some of the sites list an “average cost” without adding ancillary and professional costs, she says. Some sites break down the cost for facility, professional, anesthesia and ancillary costs. You will at least be able to get a “ballpark” figure with which you can approach a payor.
“From a negotiating perspective, I can now go back to the payor and say, ‘I know what you’re paying the hospital; I’m willing to take a 20 or 30 percent discount,’” says Ms. Smallwood. You will want to make sure that whatever discount you offer will still keep the procedure you want to perform in your ASC profitable, but demonstrating any savings opportunities should help your case with the payor.
2. Outsource your implants.
Some payors will work with you to arrange carve-outs for your implants, but you will likely contract with a few payors that will not. In those instances, you must determine whether you can absorb the cost of an implant and still make money on the cases, not perform the cases if the cost of the implant makes them unprofitable or you can outsource your implants.
When you outsource your implants, a separate company will purchase the implants for you to use and will obtain reimbursement from your payors after you use them, a strategy employed by Algonquin Road Surgery Center in Lake in the Hills, Ill. when it could not arrange carve-outs for some of its orthopedic and podiatry procedures.
“They take on the burden and responsibility, and they work with payor contractor and work out pricing and payment for the implant,” Dana McGrath, RN, MSN CASC, Administrator for Algonquin Road Surgery Center. “With most payors, and with shipping and taxes, we’re not often making money on the implants anyway, so at least this (arrangement) allows us to perform our cases.”
Algonquin Road does not pay a fee for its service, so it is not sacrificing any part of the reimbursement it receives for the procedures by outsourcing. Unfortunately, there are instances when outsourcing companies do not have a contract with a payor and, therefore, cannot purchase the implants for you. When that happens, you must determine whether you can still afford to perform the procedure on patients with this insurance provider or should send the cases to the hospital.
3. Don’t blindly stay with a clearinghouse.
If you work with a clearinghouse and are not satisfied with its results, consider looking into alternative clearinghouses. The decision to make a switch was critical for Goshen (Ind.) Ambulatory Care Center.
“Probably the most important step we have taken lately was to change clearinghouses,” says Deborah Starnes, administrator at Goshen. “Reimbursement has been much faster. We can go online and know the status of our claims at all times, and do not have to wonder whether or not our claims have been received by the payer. Rejected claims can be corrected online and quickly resubmitted. This change has been positive on our accounts receivable.”
Goshen made the change when its software vendor reported problems with the original clearinghouse and suggested switching to one its preferred clearinghouses.
4. Closely monitor impact of new payment system.
While you may have projected how the new payment system would impact your ASC’s bottom-line in 2008 (and beyond), you should be closely monitoring the exact effect now that you are receiving the new reimbursement rates from Medicare.
“We’re watching it carefully each month to see our volume of Medicare, reimbursement from Medicare and what it’s doing to our bottom-line,” says Ms. McGrath.
Ms. McGrath says Algonquin Road has made some significant changes over the past year as a result of the movement to the new system, eliminating ophthalmology procedures, slightly increasing podiatry and significantly increasing orthopedics. When comparing her Medicare net revenue per case from June 2007 to June 2008, she has seen a 36 percent increase thanks to these changes.
By reviewing the data and sharing it with the ASC’s physician-investors, she hopes to see the net revenue increase even more.
“While I review the data monthly with our management company, Health Inventures, the physician-investors also get to see it monthly,” Ms. McGrath says. “We review a list of their patients by payor and charges, collections, contribution margin and net income. So I’m showing them, month to month, what patients they are bringing in here by what payor. It’s pretty transparent.”
This not only helps the physician-investors to become more conscious of the cases they bring to the center, but it has also encouraged them to look at the ASC’s operations closer and determine if there are areas to tighten expenses, such as supply or clinical costs, she says.