When analyzing case costs, most ASCs find that implants are one of their highest expense items.
That is why it is imperative that the facility is reimbursed properly for these high-ticket items. Since receiving a discounted price on implants from the supplier is often difficult, it’s important to get private payors to pay the full cost. If payors don’t cover costly implants adequately, ASCs may lose money on procedures that require them. Facilities face a negative impact on business and revenue if they must advise providers and patients that the facility doesn’t offer services requiring implants or continue to perform these procedures at a loss.
To ensure implants are not the reason for a decrease in your ASC's profits, the following guidelines may assist in improving implant reimbursements.
1. Obtain proper implant reimbursement. Not receiving adequate reimbursement to cover the cost of implants leaves the center with one of three choices: 1) negotiate higher reimbursement from private payors; 2) negotiate lower implant costs from suppliers; or 3) discontinue services requiring high-priced implants. It’s never a good idea to tell providers that the ASC can’t afford to do one of their procedures as this may result in providers doing their cases elsewhere. This leaves higher reimbursement or lower cost as the two viable choices.
2. Track implant reimbursement. To determine what implant reimbursement the ASC receives, a tracking mechanism must be implemented. Here is a sample spreadsheet for collecting information to use in evaluating how each payor reimburses for implants:
It’s important to include all the categories listed in the spreadsheet to properly identify expenses and reimbursement for each implant used.
Designate a member of your revenue cycle management team to complete the implant spreadsheet regularly. This record will provide an overview of how different payors are reimbursing implants. Some types of ASC software may be able to assist in tracking implants through purchasing and/or inventory modules.
3. Understand how tracking implant reimbursement helps. There are several advantages derived from tracking implant reimbursement. First, it detects how much each private payor reimburses for the same implant. This will help identify where negotiations are needed. Second, the spreadsheet data can generate tables and graphs, which, when used during negotiations for better implant reimbursement, allows payors to better understand the ASC’s costs for performing procedures with implants. Third, this data allows tracking of implant costs from each supplier and identifies possible savings. Finally, it allows tracking of the quantity of implants used, the type, the supplier and the provider using which type of implant. This can provide negotiating power with suppliers.
4. Negotiate better implant reimbursement. Tracking reimbursement may reveal that the ASC is losing money on some implants. Tracking may also indicate a trend by certain payors to pay less than others. Two areas to focus on during negotiations are as follows:
Carve-Outs: For existing contracts, when negotiating better terms, discuss carve-outs of implants and ask the payor to pay for them separately rather than include them in the procedure reimbursement. Using the tracking spreadsheet and graphs, demonstrate to the payor that its flat fee reimbursement rate doesn’t cover the cost for the implant and the facility is losing money. The goal is to negotiate a carve-out fee that will cover at least the cost of the implant plus shipping and handling.
Minimum Limits: Some payors use a minimum threshold plan for implant reimbursement. This allows them to only reimburse for implants that cost more than the minimum amount specified in the contract. For example, a payor may only pay for an implant that costs $500 or more. This type of reimbursement strategy will not pay the facility for any lower-cost implants. It is important to negotiate a low minimum amount, such as $100, when negotiating implant reimbursement with these payors. In this scenario, at least the higher cost implants will be reimbursed.
Another tactic is to negotiate with the payor to group all implants used in a single procedure to be able to reach the minimum. For example, if three $90-dollar implants were used in one procedure, grouping them together would allow the facility to meet or exceed the minimum threshold and receive reimbursement of $270.
5. Appreciate the role of implant invoices in reimbursement. Understanding the payor’s contract requirements for implant claims is central to receiving proper reimbursement. Some payors require a copy of the implant invoice to accompany the claim. Others just require that it is kept on file. Maintaining an up-to-date and easily searchable invoice file system is important: the payor may need additional copies of invoices and you will want to use it for your ASC's internal auditing purposes.
6. Properly code for implants. Accurate coding for implants is imperative. Private payors may require specific revenue codes to receive reimbursement. It’s important that coders understand which contracts require which codes. Using the wrong revenue code can result in nonpayment.
There are two types of revenue codes used for reimbursement: 1) the ASC revenue code -490 or general classification; and 2) medical/surgical supplies and devices revenue code – 278 (other implants).
Also, some implants have their own HCPCS code. If the payor agrees, use the specific HCPCS code to bill. If there isn’t one, ask the payor to specify what unlisted/generic code to use. Examples include L8699 for (non-MCR) prosthetic implant not otherwise specified, which is for miscellaneous devices, or A4649, which is used for miscellaneous surgical supplies or another unlisted HCPCS Level II code.
7. Avoid erroneous denials. Implant reimbursement is often overlooked by payors, so it is important that the payment poster understand the payor contract and diligently inspect the explanation of benefits to detect missed implant reimbursements. Ensure incorrect denials are resubmitted immediately, including a copy of the invoice if requested.
8. Pursue supplier negotiation. Use the information gathered in the implant spreadsheet to evaluate implant cost for each supplier. Order implants from the supplier that offers the lowest price.
The spreadsheet also provides information about how many of each implant is being used. Where appropriate, use this information to negotiate high-volume discounts with the supplier. Rather than paying for the implant at the time of ordering, ask the supplier about purchasing frequently used implants on consignment. This allows the facility to have the implant in inventory but not have to pay for it until its use.
Tracking implant reimbursement is vital to maintaining the facility’s profit margin. Using a spreadsheet such as the example provided above to identify costs and reimbursement is key to understanding where concentrated efforts are needed to improve implant reimbursement.
Caryl Serbin, RN, BSN, LHRM, is president and founder of Serbin Medical Billing, an ASC revenue cycle management company. Serbin Medical Billing's primary objectives are to provide the best coding, billing and accounts receivable management services available to ambulatory surgery centers (hospital joint-venture, corporate-owned or independent) and anesthesia providers. Ms. Serbin has been a leader in the ASC industry for 30 years. She was the founder of the first ASC-specific billing company.