Multiple leverage opportunities are available to increase ASC reimbursement. Two that quickly come to mind are generally applicable across all outpatient surgery centers. First, always recognize the payor needs you. Second, the payor community consistently strives to find lower-cost alternatives to their members being served at hospitals.
The Payor Needs You
The payor needs to provide a comprehensive provider network to its members. Many payors offer their members a site-of-service differential to steer members to the most cost-effective and appropriate care setting. For example, a payor may only require a co-payment from the member for services provided at an ASC, but the member will be subject to more costly co-insurance provisions if the same service is obtained at a hospital facility. Therefore, the payor needs your ASC to help them accomplish their goal of securing high quality and cost-effective care at the lowest out-of-pocket cost for their members.
Moving Cases from Hospitals to ASCs
Payors are increasingly looking for additional opportunities to move higher acuity cases from hospitals to ASCs. Why? Because the difference in cost to both the patient and the health plan can be three to four times greater at the hospital. Therefore, if your ASC can entice payors with the cost savings benefit of performing higher acuity cases on their members at your facility, you may be able to create a “leverage opportunity” that can produce greater ASC reimbursement on some of your lower acuity procedures.
For example, many commercial payors have expressed interest in having total joint replacements and high acuity spine cases performed in ASCs because they recognize the opportunity for cost savings. In some instances, you can increase the leverage opportunity by offering to perform these cases at a predictable cost. Some payors (self-insured plans in particular) wish to transfer the risk associated with implant variations by agreeing to an all-inclusive facility price for each high-acuity case type that is negotiated.
If your ASC is interested in, or required to, negotiate all-inclusive rates, be sure your data accounts for all variable costs (e.g., staff, supplies, implants) and associated frequency factors before heading to the negotiation table. This includes a solid understanding of the size, number, and frequency of use for each implant type, along with any extraordinary supplies associated with each case. And therein lies the rub – many ASCs who want to perform these cases aren’t equipped to negotiate prosperous at-risk arrangements. To combat this, consider hiring a seasoned negotiator who has successfully secured at-risk arrangements – someone who will recognize and be better equipped to understand all the moving parts. Alternatively, your ASC would be wise to refrain from performing at-risk cases initially, focusing instead on cases falling under fee-for-service arrangements. Doing so allows you to assemble the necessary utilization data before attempting to negotiate all-inclusive case rates.
While adding high acuity orthopaedic and spine cases requires a capital outlay for your ASC, the added investment should not be overly detrimental if you’re already performing orthopaedic cases. In that case, chances are your center already has a good portion of the instrumentation and equipment necessary to perform the higher acuity procedures. If you are starting from scratch, however, you will want to complete a comprehensive feasibility analysis to demonstrate the costs and benefits of offering total joint replacement and/or spine cases at your facility.
In any case, enticing payors with the possibility of performing higher acuity cases on their members at your ASC could not only create a leverage opportunity, it may also add to the payor’s dependence on your ASC. This puts you in a strong position to obtain higher ASC reimbursement, something you were seeking all along.
Dan Connolly – Vice President of Payor Relations and Contracting