Industry experts comment on five common mistakes made by ambulatory surgery centers — and how to address them.
1. Claims are denied due to missing information. Bill Gilbert and Brice Voithofer of AdvantEdge Healthcare Solutions say missing information on a claim is one of the biggest reasons for denied claims, according to published reports by the health insurance industry. For the most part, these denials are completely avoidable. Payors that receive claims with incomplete information will generally reject them automatically, they say, which is why surgery center staff must be trained to catch omissions. The sophisticated claims adjudication systems deployed by payors are much more advanced than they were five years ago, and in many cases, the software deployed by centers has not caught up.
"Studies show that if you had that information on the claim upfront, the vast majority of those claims would not be denied," Mr. Voithofer says. Missing information could include the group tax ID number and the group address and constitutes the most common cause of "administrative denials," they say. Administrative denials, for the most part, are self-inflicted issues which should be avoided.
2. Too many rooms, not enough cases. According to Rob Murphy, founder and CEO of Murphy Healthcare Group and founder of ASC Turnaround Group, one of the top reasons for ASC failure involves over-building the center and failing to staff enough surgeons or bring in enough case volume. "We've been called into situations where ASCs were built with five operating rooms that only needed one or two," he says. "The ongoing costs of maintaining these large physical plants can really eat away at the profits." He says in extreme cases, partners are required to write checks to the ASC to keep it afloat financially — a major red flag that the ASC is failing and urgently needs outside help.
3. Not having an accurate picture of your A/R. One of the most common problems in surgery centers is a general failure to understand A/R, says Ken Bulow, vice president of ASC services for GENASCIS, a division of abeo. He says the best way to keep track of A/R is to make sure all your in-network contracts are loaded into your billing system and adjustments are recorded at the time of charge entry to give you an accurate picture net revenue when the claim is submitted. He says out-of-network is a little more difficult, but you can still estimate on an account-by-account basis. "Once you're comfortable that you have a good, true picture of what your A/R is, it's important to put your resources on the accounts with the biggest chance of payment," he says.
He says it's important to segment your A/R and assign separate people to self-pay, Medicare/Medicaid and commercial payors — or, if you only have one person available to do all three, to split up their time so the assignments are kept separate. He says it will probably be more lucrative to follow up on a delayed payment from a payor, for example, than to follow up on a self-pay account that has lapsed over 120 days.
4. Turnover times are too long. Facilities must have a realistic vision of their turnover times and always work to make that time shorter. If there isn't enough time planned between patients to turnover the room, the next case will start late and both patient and physician time will be wasted. This also means staff will stay longer and place a burden on the payroll.
"The single most expensive waste in the facility comes from wasting time, and waste means inefficiency," says Larry Teuber, MD, chief medical officer and president of Medical Facilities Corporation and founder and physician executive of Black Hills Surgery Center. There will be some unforeseeable delays, such as difficult intubations, problems during induction, problems because the patient is obese or technical challenges during surgery that could make the procedure run over schedule.
When delays are unpredictable, the center can roll with the punches; however, when delays occur due to physician tardiness or inappropriately scheduled OR times, there are ways the surgery center can eliminate them.
5. Waiting several years to renegotiate a payor contract. Insurance company negotiation teams generally operate under strict guidelines about the increases they can offer based on each year's budget. If you let your contract lapse, rolling over under the evergreen clause from one year to the next, then ask for several years' worth of increases, the payor will simply not be able to afford your request. "If you let your reimbursement lapse for five years, it's going to be hard — if not impossible — for the payor to absorb five years of increases in a one-time rate adjustment," says Dan Connolly, MHS, ARM, vice president of payor contracting for Pinnacle III. "Poor planning on your part creates a crisis on the payor's end and can easily lead to hard feelings."
Mr. Connolly recommends looking at each contract every year and exercising some form of renegotiation if feasible. He says if the contract has a 12-month term, the surgery center should assemble its renegotiation plan and start the renegotiation process no later than 120 days prior to the contract's anniversary date. This will allow the payor the necessary time to assemble historical reimbursement and utilization data, for both parties to analyze proposed reimbursement scenarios and, ultimately, for the payor to load and execute the new rates upon renewal.
1. Claims are denied due to missing information. Bill Gilbert and Brice Voithofer of AdvantEdge Healthcare Solutions say missing information on a claim is one of the biggest reasons for denied claims, according to published reports by the health insurance industry. For the most part, these denials are completely avoidable. Payors that receive claims with incomplete information will generally reject them automatically, they say, which is why surgery center staff must be trained to catch omissions. The sophisticated claims adjudication systems deployed by payors are much more advanced than they were five years ago, and in many cases, the software deployed by centers has not caught up.
"Studies show that if you had that information on the claim upfront, the vast majority of those claims would not be denied," Mr. Voithofer says. Missing information could include the group tax ID number and the group address and constitutes the most common cause of "administrative denials," they say. Administrative denials, for the most part, are self-inflicted issues which should be avoided.
2. Too many rooms, not enough cases. According to Rob Murphy, founder and CEO of Murphy Healthcare Group and founder of ASC Turnaround Group, one of the top reasons for ASC failure involves over-building the center and failing to staff enough surgeons or bring in enough case volume. "We've been called into situations where ASCs were built with five operating rooms that only needed one or two," he says. "The ongoing costs of maintaining these large physical plants can really eat away at the profits." He says in extreme cases, partners are required to write checks to the ASC to keep it afloat financially — a major red flag that the ASC is failing and urgently needs outside help.
3. Not having an accurate picture of your A/R. One of the most common problems in surgery centers is a general failure to understand A/R, says Ken Bulow, vice president of ASC services for GENASCIS, a division of abeo. He says the best way to keep track of A/R is to make sure all your in-network contracts are loaded into your billing system and adjustments are recorded at the time of charge entry to give you an accurate picture net revenue when the claim is submitted. He says out-of-network is a little more difficult, but you can still estimate on an account-by-account basis. "Once you're comfortable that you have a good, true picture of what your A/R is, it's important to put your resources on the accounts with the biggest chance of payment," he says.
He says it's important to segment your A/R and assign separate people to self-pay, Medicare/Medicaid and commercial payors — or, if you only have one person available to do all three, to split up their time so the assignments are kept separate. He says it will probably be more lucrative to follow up on a delayed payment from a payor, for example, than to follow up on a self-pay account that has lapsed over 120 days.
4. Turnover times are too long. Facilities must have a realistic vision of their turnover times and always work to make that time shorter. If there isn't enough time planned between patients to turnover the room, the next case will start late and both patient and physician time will be wasted. This also means staff will stay longer and place a burden on the payroll.
"The single most expensive waste in the facility comes from wasting time, and waste means inefficiency," says Larry Teuber, MD, chief medical officer and president of Medical Facilities Corporation and founder and physician executive of Black Hills Surgery Center. There will be some unforeseeable delays, such as difficult intubations, problems during induction, problems because the patient is obese or technical challenges during surgery that could make the procedure run over schedule.
When delays are unpredictable, the center can roll with the punches; however, when delays occur due to physician tardiness or inappropriately scheduled OR times, there are ways the surgery center can eliminate them.
5. Waiting several years to renegotiate a payor contract. Insurance company negotiation teams generally operate under strict guidelines about the increases they can offer based on each year's budget. If you let your contract lapse, rolling over under the evergreen clause from one year to the next, then ask for several years' worth of increases, the payor will simply not be able to afford your request. "If you let your reimbursement lapse for five years, it's going to be hard — if not impossible — for the payor to absorb five years of increases in a one-time rate adjustment," says Dan Connolly, MHS, ARM, vice president of payor contracting for Pinnacle III. "Poor planning on your part creates a crisis on the payor's end and can easily lead to hard feelings."
Mr. Connolly recommends looking at each contract every year and exercising some form of renegotiation if feasible. He says if the contract has a 12-month term, the surgery center should assemble its renegotiation plan and start the renegotiation process no later than 120 days prior to the contract's anniversary date. This will allow the payor the necessary time to assemble historical reimbursement and utilization data, for both parties to analyze proposed reimbursement scenarios and, ultimately, for the payor to load and execute the new rates upon renewal.