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ASC Business Strategy Archives - Pinnacle III

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

ASC Business Strategy: Peering Through a Looking Glass into Your Organization

ASC Business Strategy: Peering Through a Looking Glass into Your Organization

By ASC Management, Leadership No Comments

I have often told groups who are interested in developing a surgery center, or who already have one, that seeking “professional help” to assist them with ASC business strategy is a smart move. Outside consultation can provide an organization with a fresh, yet experienced, point of view. This year I decided to practice what I preach.

Over the last year, Pinnacle III has been diving deep internally to refine our systems, processes, and strategy. After several months of self-assessment, we decided to seek outside professional help to realize the true benefits of our strategic planning process. We selected a consultation firm that specializes in small businesses experiencing growth. Their task? Provide us with operational, organizational, and cultural input and guidance throughout that growth process. The process of internal review and change has been challenging and rewarding.

I now double down on my original stance – organizations, especially developing or growing businesses such as ASCs, should seek outside professional consultation to assist in building and implementing business strategy.

Taking the Steps

To help you visualize how this process might work in your organization, I’ve listed the steps I took when seeking outside professional consultation.

  • First, we made an initial determination of the strategic initiatives we wanted to accomplish. This gave us an idea of the organizational goals we might need outside help to accomplish.
  • Next, we chose a strategic consulting firm. To obtain a list of the consultants serving businesses like our own, I reached out to people I respected in the business community for recommendations. I discussed with my contacts what I was trying to accomplish. After combining input from trusted colleagues and business associates with my own research, I narrowed my scope to three potential consultants.
  • Third, I interviewed each firm. The first firm operated under proven, academic-based structure, with a great deal of experience working with institutional organizations. The second firm was experienced in strategy, but typically worked with companies larger than Pinnacle III. And the third firm, the one I ultimately chose, was a group run by an individual who had started and run several companies and whose experience was geared more towards mid-sized companies. I felt this was the best fit for us.

What I Learned

Since making the decision to go down this road and choosing someone to work with, I have learned several things.

  • You must be ready for transparency. Unless you are willing to pull back the curtain on how your business is run and managed, don’t take this step. We opened our books and gave our consultant access to our management team, as well as other key members of our organization. We made it clear to our entire team no topic was off the table and all comments would be confidential.
  • You must be ready to put your ego aside. If you can’t “handle the truth” (remember Jack Nicholson in “A Few Good Men”), don’t embark on this journey. Each management team member – especially my partner, Rick DeHart and I – were provided feedback that resulted in small to moderate ego bruising. We were reminded the feedback received, both from the consultant and the team, was meant to improve our organization and meet our established goals.
  • Getting a diagnosis is worthless unless your organization is committed to the treatment plan. We went into this exercise committed to addressing the problem areas and taking the time to make changes to ensure our continued success. If you, as the leader, or members of your team are not committed to doing what is necessary to achieve the goals initially identified when the process began, you will only end up wasting valuable time and money.
  • Keep the fire burning. We are experiencing what we expected to experience. None of the initiatives are a quick fix – if they were, we would probably already have implemented them. Instead, as an organization, we have had to stay committed to our original goals and the long-term benefits we will receive from this initiative. It is up to each leader in our organization to keep us moving forward to reach our goal.

Regardless of how your business measures success, strategic initiatives need to be in place to accomplish your organization’s goals. Evaluating your organization’s current business strategy and environment relative to where you want to be is the first step toward creating those strategic initiatives. Then, when appropriate, business leaders should have the courage to seek outside consultation to structure the implementation and execution of plans designed to achieve the desired goals. Building a team capable of accomplishing the initiatives and recommendations to move the company forward is an equally important step. Working with an outside consultant can also bring clarity on how to strategically build and refine your team at a rate on pace with your company’s growth.

As established leaders, it may be difficult to admit things could be better managed, or that you may not have all the answers. A business that overcomes the ego of its leaders, incorporates input from trusted resources including outside consultants, and grows through internal process review and refinement, is a sign of a truly strong and humble leader.


Robert Carrera, President & CEO