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January 2019

ASC Case-Costing: Improving the Data Collection Process

ASC Case-Costing: Improving the Data Collection Process

By ASC Management, Leadership No Comments

For an ASC leader, understanding the financial impact of each surgery performed in an ASC is critical to the facility’s success. To achieve this, you must have detailed, accurate data on surgical costs and reimbursements.

Most facilities have software that produces reports which assist with gathering and modeling data. Depending on the resources available at your facility, the difficulty in gathering and using case-costing data will vary.

Avoiding ‘bad’ data

Some management companies, like Pinnacle III, employ a data analyst to provide tools to analyze the cost and reimbursement of cases. However, even with the help of a data analyst, the analysis will only be helpful if the data collection process is accurate and thorough. A common saying among data scientists is, “Garbage in equals garbage out.” For ASCs, if the person pulling the data does not have accurate data to work with, case-costing will be inaccurate.

Here are a few ways to avoid producing bad data.

  • Ensure staff are entering valid data into your software and paying attention to details. Educating staff about the impact of their role in this process is key. Staff mistakes, such as entering equipment cost as supply, can falsely inflate the cost of the case in your analysis. These mistakes are easily avoided by focused staff members who have received adequate training on their function and impact.
  • Update staff compensation. If pay rates aren’t current in your software, the labor costs associated with a case will be incorrect.
  • Engage your materials personnel. The material personnel are vital to keeping information current and accurate. Supply pricing changes must be up-to-date in your software.
  • Keep preference cards current. Make sure hold items are not listed as open. Ensure standard items used on every surgery are correct. This will avoid waste and reduce errors when accounting for what was used during each surgery.
  • Don’t forget supplies used outside of the OR. The supplies used in pre-op and PACU for a patient can seem insignificant. However, accounting for them with the surgery ensures general supply expenses spread among all cases is reduced. Create a pre/post bundle price for each type of surgery that gets added to the supply used. And don’t forget to include anesthesia supplies and drugs, which are often overlooked.
  • Include everything with a fee. Often there will be a charge for something, such as rental for a laser or a tray drop-off, that can be easily left out. If certain items are always used and the fee is known, add them to the preference card and include the fee in your software. Educate staff to facilitate understanding about which items carry a fee to ensure those costs are added to the case.
  • Accurately capture implants and instrumentation. Avoid including reprocessed items as an expense. Ensure fees are not attached to reprocessed instruments or they could be charged to the case as a supply used. Ensure implants used are reflected in your software with the appropriate price.

Final tips for case-costing analysis

There are obvious costs to capture, however, some items may be overlooked, particularly if you are not utilizing a data analyst. Some things to remember when gathering case-costing data are:

  • Include total visit time as well as OR time. The length of time the patient spends in the facility from admission to discharge is an important factor in the overall cost of a case.
  • Use your P&L to tie-in general expenses to be allocated among all cases as an indirect expense.
  • Include the payor mix. This is very important as the payor mix can be a contributing factor to variances among surgeons.
  • There is never too much detail. The process is tedious, but the result will benefit the ASC in many ways. The more ways the data can be sorted, the easier it will be to identify inefficiencies, waste, spending variances, long recoveries, and a variety of trends.
  • Separate supplies and implants. This will allow you to compare surgeons by case and identify opportunities for savings and standardization.

Once the data is gathered, configure it in a way that will allow you to study it from multiple angles (e.g., via a spreadsheet program). Begin with a broad view – by specialty, physician, CPT, or payor, for example. Then examine the subsets – perhaps by specialty/by physician or by physician/by CPT. If you notice significant variances, dig deeper to determine the cause. As you study the data you may find errors. Rather than being frustrated by inaccuracies, use errors as an opportunity to refine your processes and/or systems. Avoid sharing data with your surgeons until you are confident it is accurate. Seek their insights when sharing the information; they may be able to point to additional areas to investigate prior to making operational decisions based on the data.

As you refine your processes and systems, keep your staff and surgeons in the feedback loop. Addressing errors as they arise will create a more seamless process that allows you to focus on other improvement opportunities.

Stay tuned for the second-part of my case-costing blog series. In my follow-up blog, I will further discuss best-practices for analyzing case-costing data. I will also delve into ways to utilize case-costing data, and the benefit of engaging surgeons in the process.

Lori Tamburo, Director of Operations

Curbing Healthcare Spending: What Health Plans Are Doing to Work Against Out-Of-Network Providers

Curbing Healthcare Spending: What Health Plans Are Doing to Work Against Out-Of-Network Providers

By ASC Development, ASC Management, Payor Contracting No Comments

As healthcare spending in the United States continues to rise at a seemingly unstoppable pace, healthcare entities are making attempts to curb healthcare spending. This has led to changes in the healthcare marketplace and delivery of care to consumers. For example, health insurers are attempting to rein-in spending by decreasing the use of out-of-network providers. Recently, when asked what health insurers are doing to make it more difficult for out-of-network providers to secure patients and collect payment, I responded with “A variety of things depending on what the health plan is trying to prevent.”

While health plans are using a variety of measures to thwart out-of-network activity, this blog will focus on three prevention techniques that have perhaps become more prevalent recently:

  1. Educating members on the costs of using an out-of-network provider,
  2. Imposing penalties on in-network providers for use and/or referral to out-of-network providers.
  3. Making it difficult for out-of-network providers to collect payment.

Educating Members on the Costs of Using an Out-of-Network Provider

Health plans offering their members out-of-network benefits/coverage are going to greater lengths to steer their members away from out-of-network providers and to in-network providers through education.

As a first line of defense, health plans are taking steps to re-direct members to in-network providers via posts on their website and/or calls from pre-authorization staff, where the member is being educated on the increased cost associated with care rendered by the out-of-network provider. Some health plans provide an online hypothetical cost comparison tool. The tool helps members better understand the cost differences among doctors, facilities, and laboratories that do not participate in their networks.

Some health plans inform their members the out-of-network provider has no limit on what they can charge for their services, and those provider’s fees will not be discounted because they do not participate in the health plan’s provider network. Additionally, insurers may inform their members when an out-of-network provider is used, that they will likely end up paying a higher deductible and co-insurance.

Finally, health plans are alerting their members if they use an out-of-network provider, only a portion of the out-of-network charges will get paid by insurance and, absent a state-specific law or regulation, the member will be responsible for paying the remainder of the charges.

Penalizing In-Network Providers for Use of Out-of-Network Providers

When an in-network provider such as a surgical facility or surgeon uses the services of another provider who is not contracted with and participating in the plan’s network, the in-network provider may now be putting itself at risk for repercussions from the health plan.

Contracts between health plans and providers may require contracted providers to restrict their use of or referral to other contracted providers within the network. When these contracts are breached, consequences may arise including being served a contract termination notice or experiencing financial penalties. These types of restrictions have recently been extended to anesthesiologists, radiologists, pathologists, and surgical assistants.

These out-of-network referral situations have garnered significant attention because they can create unexpected “surprise bills” and substantial financial burdens for patients. As a result, health plans have started terminating contracts with in-network surgeons that use out-of-network surgical assistants and/or out-of-network facilities.

Some health plans are requiring new facilities seeking in-network status to accept contract provisions that allow the health plans to impose financial penalties on the facility for the use of out-of-network anesthesia, radiology, lab, and pathology providers. Penalties have ranged from a small amount to over half of the negotiated surgical fees. In addition, health plans have begun pressing providers to hold harmless provisions that protect both the payer and member from the added costs of out-of-network providers, including limits or prohibitions on balance billing.

Not Making It Easy to Collect Payment

Rather than reimbursing the out-of-network provider for services rendered, some health plans issue payment directly to the patient. This may occur even if the out-of-network provider has had the patient sign an assignment of benefits form, whereby the patient requests his or her health plan issue payment directly to the provider. And once the payment they’ve been waiting for has been sent directly to the patient, it may become more difficult for the out-of-network provider to collect payment. If patients have cashed and already spent the insurance reimbursement check, it may be difficult for the out-of-network provider to secure remuneration.

The practice of sending the payment to the patient will continue to be a deterrent to out-of-network providers. While a handful of states have enacted legislation which requires insurers to honor the assignment of benefits, chasing patients for payment will likely remain a labor-intensive administrative burden associated with managing out-of-network claims well into the future.

Making an Informed Decision on Going Out-of-Network

For some providers, the out-of-network strategy may appear to be the best fit for their business. But, facilities and physicians who either currently accept patients on an out-of-network basis or are contemplating doing so should also be aware of the potential obstacles and limitations of this strategy. Obstacles for out-of-network providers include persuasive education for plan members on the financial consequences of securing care from an out-of-network provider, the possibility of having penalties imposed on in-network providers, and the risk of chasing patient payments. If surgery centers do not understand the impact this will have on their business in the long-run, the vitality and long-term success of the center could suffer. It is in each practice’s best interest to understand the pros and cons of being an out-of-network provider prior to making an informed decision for the organization.

Dan Connolly, VP, Payer Relations & Contracting