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ASC Payer Relations Archives - Pinnacle III

Jan 09
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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

Nov 13
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What’s Your ASC’s Leverage Point in Payer Negotiations?

What’s Your ASC’s Leverage Point in Payer Negotiations?

By Leadership, Payor Contracting No Comments

When it comes to payer negotiations, your ASC leverage point is the weight you bring to the game. What do you lean on to produce results? What card(s) do you play to change the game?

What we’re talking about here is simple physics – matter, motion, energy, and force. Or put more simply, influence. Influence equals change. And no influence equals no change. If what you’re leveraging weighs on you as much as it does your opponent, it’s not leverage. Think of a teeter-totter on a playground with two evenly weighted people on it. It doesn’t move much! You need force applied to one side to create influence and shift the situation.

Your ASC leverage point is achieving the most gain while exercising the least amount of loss. It is important to know what you can concede and what you must gain before your walk into any negotiation. Apply this to all parts of your ASC business operations, especially negotiation with payers.

Optimal leverage enables you to impact change that multiplies your efforts and preserves the utilization of your resources.

Let’s look at an ASC leverage point example.

Is achieving a slight increase in your ASC’s procedure reimbursement at the cost of surrendering payment for implants a leverage point? No, because it costs your ASC as much as it gains. Again, think of the teeter-totter example with two evenly weighted parties attempting to move it. You must work to concede less while still achieving positive results. If your ASC can gain a decent increase without giving up anything other than perhaps the time and energy necessary to make its case, then a true leverage point is exercised.

For a leverage point to work in your favor, it must be sensible, perceived as credible by the payer, and not merely a perceived threat. If perceived as a threat, it will not have the power to influence the other side to move closer to a negotiating position. In either case, an ASC leverage point has potential to bestow gains or impose losses on the other side. However, a genuine leverage point is not overstated or punitive; it’s consequential and practical. It’s the prime force you exert to get what you need and goes beyond strong negotiating skills. Negotiation skills cannot replace a genuine leverage point.

Consider another ASC leverage point example.

Say a payer bundles implant payment and is not offering adequate reimbursement to cover your ASC’s costs plus a reasonable profit. Does your ASC threaten to terminate its contract with the payer because the procedure pays poorly? (This is probably a threat some payers hear often but providers rarely follow-through on.) This tactic would likely amount to a lose-lose proposition for both parties.

An alternate option is to inform the payer your ASC can no longer accept these cases on their members and must divert the cases to a higher paid (facility perspective) and higher cost (payer perspective) center to make your case. The former is not a perceived leverage point unless your ASC truly intends to carry out the termination. But the latter is not only grounded, it will demonstrate to the payer how much they will lose by not administering a reasonable procedure reimbursement that covers your costs and nets a reasonable profit.

Let’s face it, your facility needs the payer to pay more, but the payer has little incentive to pay your facility more. Payers hold significant leverage. To make your case, your ASC must find and exercise its leverage point and change the equation.

A change in the equation can be a payer gaining more information and an increased understanding and willingness to adapt to your ASC’s thinking. Your ASC is offering a cost-containment solution to the payer. Rather than simply asking for greater reimbursement, your ASC must negotiate rates that allow you and your payers to stay in business in a competitive health care market.

Dan Connolly, VP of Payer Relations & Contracting

Feb 16
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ASC Managed Care Plans

What Golf Can Teach Us About Dealing with ASC Managed Care Plans

By Payor Contracting No Comments

By now, those of us in the ASC industry have all encountered situations where some payors do not reimburse separately for implants. This payor approach to reimbursement for high ticket items can be difficult to navigate.  Recently, I realized scheduling these patients at our facilities lends itself to a golfing analogy.

How so?  First, these cases come with a handicap.  Second, handicaps allow golfers of varying abilities to indulge in fair play. Third, polishing your drivers improves your game.  The key takeaway – you must keep score to improve your game.

Calculating Handicap

In golf, a handicap essentially signifies the number of strokes above or below what a first-rate player would normally need to achieve the desired goal (standard) on a particular hole or golf course.  A skilled golfer will count their strokes to gauge their success against the standard.

When your facility is faced with a managed care provider that does not reimburse for implants separately, it also needs to assess its handicap. Identifying the standard reimbursement for the procedure is essential to determine your handicap.  Consider all variables – costs and reimbursement by case type, for example – to warrant the best chance of obtaining your desired compensation goal.

Handicaps are based on recent play and are subject to change over time.  Similarly, it makes sense for your ASC to routinely weigh the current costs of implant(s) against expected reimbursement. When sufficient surplus is not present to cover projected costs, notify the physician immediately.

Like calculating handicap, there are easy ways to go about calculating costs and projected reimbursement. The adage “you can’t manage what you don’t monitor” applies here.  Measuring each case’s costs against anticipated reimbursement is part of improving your handicap.

Fair Play

Handicaps allow golfers of varying abilities to compete against one another on somewhat equal terms. In essence, it levels the playing field.

Prioritize scrutinizing costs and reimbursement on cases with significant implant costs. These costs may not be covered in overall bundle reimbursement methodology which can negatively impact your ASCs revenue.  Educating your physicians about proper case selection when they choose to schedule at your facility is fair play.

You Must Polish Your Drivers

Avid golfers will tell you polishing your drivers should be a regular part of your maintenance routine.  Preparing your drivers protects your investment and increases the possibility of improving your game.

Along the same lines, if you prepare your surgery center’s drivers, your physician owners will understand the potential financial benefits and issues that occur with their implant-intensive cases.  Doing so creates a higher likelihood of protecting their investment. 

You Must Keep Score to Improve Your Game

Ultimately, you want to improve your game. To do that, you need to keep score.  In this sense, think of scoring as receiving the reimbursement necessary to cover the costs of, and provide for, a reasonable margin for a specific surgery.  Track surgeries that do not meet this standard. This data can assist you demonstrate to payors how certain cases do not meet your expected margin. You can improve your score through evidence-based negotiations.

Conclusion

In summary, scheduling patients associated with plans that do not reimburse for implants separately can be tricky. Ensure you are tracking case costs and reimbursement, routinely educating physician users, and adjusting for challenges. This is not only necessary to improve your game, it is essential for fair play.  

Dan Connolly – Vice President of Payor Relations and Contracting