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Dan Connolly 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

Jun 06
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Securing Payer Contracts for Your De Novo ASC – It’s About Time!

Securing Payer Contracts for Your De Novo ASC – It’s About Time!

By ASC Development, Payor Contracting No Comments

Does anything matter more to your de novo ASC’s long term operational success than reimbursement rates and volume? Yes! While both reimbursement and volume are important, buying yourself the time required to secure credentialing, carefully negotiate reimbursement rates, and execute contracts with your key commercial payers is integral to your new facility’s success. They say, “Time is money.” In this scenario, that translates into securing adequate capital to cover operating costs while you accomplish crucial contracting tasks on behalf of your ASC.

Assessing Your Needs

Consider the following when assessing the cash reserves, line of credit, and time your de novo ASC will need during the payer contracting ramp-up stage of your development project.

Payer Credentialing

Credentialing for the newly developed ASC will take time. Credentialing requirements vary by payer. Some payers may require your new facility to receive approval from Medicare of its enrollment application prior to accepting your ASC’s credentialing application. To complete Medicare’s enrollment application, your ASC must perform several “test” cases. The current requirement is 10 cases. These cases will involve coverage from insurers other than Medicare. It not only takes time to perform these cases, it also takes time to select them from your surgeons’ patient pool of cash pay, workers’ compensation, auto, or charity cases that are readily available for surgical care shortly after your ASC opens. Completing this portion of the process can take several days to several weeks.

Some payers may require your ASC to be certified by Medicare and/or accredited by one of the CMS-approved accreditation organizations prior to completing credentialing. Once your new ASC’s Medicare enrollment application is approved, your facility will be placed on Medicare’s unannounced survey calendar. This means a surveyor may show-up anytime in a 90-day window for the on-site certification survey. Then, once the certification survey is finished, it may take several more weeks for the parties to exchange and/or process documentation before Medicare issues your certification letter. The certification letter provides your ASC with its Medicare number and Provider Transaction Access Number (PTAN). This portion of the process can take several months and must be accounted for in your project timeline.

Finally, once your ASC meets all the credentialing documentation requirements mandated by payers, it may take several more weeks for their credentialing committees to review and approve your credentialing application. Even if all goes well with credentialing, contracts cannot be executed before reimbursement is negotiated and each payer loads each agreement into its claims processing system.

Reimbursement Negotiations

Negotiating reimbursement rates take time. It will take time to obtain optimal reimbursement – or rates that are close to what you need – because payers often attempt to pay new ASCs lower than existing ASCs. This may be because payers view new ASCs as low hanging fruit on the cost-savings tree. Payers see an opportunity to save money by proposing lower reimbursement which, unfortunately, is quickly accepted by some new cash hungry ASCs.

From a short-term perspective, it may appear to make sense for a new ASC to accept the proposed low rates to secure payer contracts which then allows them to quickly start seeing commercial patients. However, in the grand scheme of things, the ASC is not solving a problem – it’s just delaying a problem. Such a situation gives rise to artificially setting market rates which takes additional time and effort to resolve during subsequent renegotiations.

It takes time and effort to secure reasonable reimbursement. It may take your new ASC a few to several months to negotiate agreeable reimbursement and contract terms with all its major payers. While some negotiation efforts can begin before the facility opens, most payers will not take new ASCs seriously until they open their doors. Maybe that’s because, until your doors are open, an opportunity cost to the payer and its members does not exist.

Executing Contracts

Waiting for payers to load the contracts you negotiate takes time. It generally takes 30-45 days, depending on the payer and the time of year, but occasionally it can take well over two-months. Oftentimes, the only thing your ASC can do during this stage is hurry up and wait. Therefore, the time spent in this portion of the process must be accounted for as well.

Gathering Resources

Having access to adequate capital to meet your ASC’s operating costs for 6-12 months after you open may be necessary to buy the time you need to secure your payer contracts. This is an important consideration when selecting a lender and applying for a line of credit for your de novo ASC.

No one can say exactly how long it will take. However, you should be financially prepared to spend a significant amount of time in the payer contracting ramp-up period. There is no way to get around this often-lengthy time investment, but laying the proper reimbursement foundation is a key component of your de novo ASC’s long-term success.

Dan Connolly, VP of 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