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Payor Contracting 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

Jul 11
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asc reimbursement

Playing the ASC Reimbursement Shell Game

By Payor Contracting No Comments

When a payer sends you a new ASC fee schedule or other changes to your surgery center’s reimbursement terms, and touts an overall increase, beware! The proposed changes could unfavorably impact your bottom line. For that reason, consider reimbursement revisions with a healthy dose of skepticism.

Surgery center reimbursement changes offered by payers remind me of a sleight of hand shell game. A shell game is a gambling pastime played at carnivals or street fairs. A pea (or similar object) is hidden under one of three nutshells. The shells are quickly shifted around and the spectator is asked to track the location of the pea. Typically, the spectator loses because it’s nearly impossible to follow the pea’s path. The trick itself became so well known, the term “shell game” is now used figuratively to describe measures taken to deceive.

Controlling health care costs has become the great shell game for payers. They establish new rates of payment through sleight of pen, moving reimbursement from one area to another. They may transfer it altogether, shifting the payment responsibility to the patient via higher deductibles, co-payments, and coinsurance. While we may not be able to end the shell game, we can establish a comprehensive method to deal with proposed reimbursement changes that minimizes our losses.

Reductions in reimbursement can come in various forms:

  • changes in the reimbursement by payment category,
  • reassignment of procedures to a different, lower paying category, 
  • assigning previously unassigned (aka unlisted) procedures reimbursed at a percent of billed charge to a payment category, or
  • changes to the payer’s multiple procedure payment logic.

When you receive a payer’s proposed fee schedule or reimbursement changes, the only way to identify what the true effect will be is to pay attention. Keep your eye on the pea! Compare the payer’s proposed reimbursement to your facility’s current reimbursement on all procedures performed for the payer’s members during the last twelve months. Measure the full impact of changes by adjusting your analysis to account for procedure utilization over the same period. An analysis combining both measures will help you “follow the money” to assess the severity and frequency of the changes. Gauging the overall financial impact of the proposed changes will help you determine if you want to accept them.

Changes in fee schedules can only be used to perpetrate deception when you don’t complete a comprehensive analysis. Combat sleight of pen by implementing a thorough process to accurately assess the potential impact of proposed changes. You, and the ASC industry at large, will be glad you did!

Dan Connolly – Vice President of Payer Relations & Contracting

Mar 22
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High Deductible Health Plan Members

When is a Self-Pay Arrangement a Good Prescription for High Deductible Health Plan Members?

By Payor Contracting No Comments

Recently I was asked what ASCs could do to assist patients who can’t afford to pay for a procedure that’s covered under their high deductible health plan (HDHP).  If you haven’t faced this question yet, brace yourself!  The findings of the Kaiser Foundation and Health Research and Education Trust’s 2016 Annual Survey suggest you will soon.

Kaiser’s survey indicates four out of five patients who arrive in your facility are likely covered by a high deductible plan.  It further reveals that deductibles on employer sponsored health insurance policies rose 12% in 2016.  This is four times faster than premiums increased.  The average deductible for single coverage is almost $1,500 with many plans exceeding that amount.  Since 150 million Americans have coverage through their employers, expect to see patients with high deductibles more often.[1]  

I negotiated a contract with a payor on behalf of a client and was pleased the end result was exceptional reimbursement for the ASC.  However, one of the facility’s surgeons was approached by a patient who had insurance with that payor.  To my surprise, the surgeon was not as impressed with the reimbursement as I was.  He was concerned the payor’s contract made the ASC cost-prohibitive for his HDHP patients.  Talk about unintended consequences!  

Since I contributed to creating the problem, I had a stake in finding ways to minimize the adverse effects for the ASC and its patients.  One way was to educate patients on their right to opt-out of insurance and create a self-pay arrangement.  If you are wondering if your ASC and its patients could benefit from a self-pay arrangement, consider the following:

  • What limitations does your ASC need to be aware of prior to pursuing this route?
  • When can your ASC recommend to a patient that it may make sense for them to opt-out and enter into a self-pay arrangement?

What limitations does your ASC need to be aware of?

Review your contracts to determine which ones call for direct billing.  Most, if not all, contracts with insurance companies require providers to directly bill the insurer for covered services provided to their members.  

Federal regulations now allow patients covered by health plans the right to opt-out (typically for privacy reasons).  As Wall Street Journal clarifies: “Cash prices are officially aimed at the uninsured, but people with coverage aren’t legally required to use it.”[2]  If they opt-out, they choose to pay a provider in full on or before the day of surgery and relinquish the privilege of the provider billing the insurance company on their behalf.  

Some precautionary measures your ASC should be aware of include:  

  • Does your contract have a “most favored nation (MFN)” clause?  A MFN clause essentially restricts your ASC from accepting lower payment for a service from anyone other than the payor that mandated the clause.  In other words, your discounted rate for self-pay patients cannot be lower than what the insurer with the MFN status pays your ASC.  Fortunately, MFN clauses are not common these days.  But if they’re overlooked, this condition could present a problem if you deeply discount ASC fees for self-pay patients.      
  • Your patients need to be informed they can’t avoid paying their deductible under their HDHP. If the patient opts to seek care under a self-pay arrangement, an insurance claim will not be filed.  This means the amount they remit under the self-pay arrangements is not credited to (applied against) their deductible.      
  • Once a patient opts out of insurance, they cannot expect the ASC to bill the insurance company at a later date. By that point, it is likely the claim would be outside of timely filing requirements and subject to denial.

The primary message is “do your homework.”  This starts with knowing the terms in each of your insurance contracts and, when necessary, seeking legal opinion about your options.  Further, find out if there are laws in your state that override federal regulation.  Typically, the most restrictive laws will dictate your self-pay pricing.

When can your ASC recommend a self-pay option?

It makes sense for a patient to elect self-pay when:

  • The patient expects to be responsible for paying the ASC the full amount due under their HDHP.
  • The patient’s deductible is high and their health is such they do not anticipate reaching their deductible during their plan year.
  • The amount the patient will pay under your ASC’s self-pay policy will be substantially less than they would owe if you submitted the claim under their HDHP. Remember to take into consideration the contracted rate (allowable), not merely the fee you bill to the payor.  
  • The patient is able to pay for services in full, via cash or cashier’s check, on or before the day of surgery.
  • The patient is willing to sign a form electing to opt-out of insurance and enter into a self-pay arrangement.
  • The patient, for privacy reasons, wishes to withhold releasing their medical records to their insurance carrier.

Ensure patients who opt-out, specifically sign an “election to opt-out of insurance” clause on your self-pay form.  

By acknowledging this clause, the patient is stating they understand:

  • They have chosen to opt-out of their insurance.
  • Your ASC will not be filing a claim with their insurance company.
  • If the patient were to file a claim on their own, there is no guarantee it will apply towards their deductible. This is because the patient chose not to use insurance.

At the time of scheduling, it can be difficult to predict all the procedures that will be performed when the surgery actually takes place.  For that reason, add a disclaimer to the election form alerting the patient to the possibility of an alternate procedure and/or additional procedures being performed. Ensure they accept responsibility for paying the difference between the quoted price and the actual price after the “time of service” discount is applied.

Also, it is important to clarify upfront that receiving the discounted self-pay price is contingent upon payment being made on or before the date of service via cash, money order, or cashier’s check.   If your ASC opts to accept payment from the self-pay patient via credit card, consider adding a 3% credit card processing fee to your cash price.  Doing so will incentivize self-pay patients to pay with cash, money order, or a cashier’s check.

Finally, your ASC should not send any claims to the carrier for the opt-out episode of care, nor provide a claim form to the patient for claim filing purposes. Instead, incorporate all charge and payment information into the opt-out self-pay election form.  This precautionary measure may deter opt-out self-pay patients from sending a claim to their insurance company.   

Dan Connolly – Vice President of Payor Relations and Contracting

[1] “The Kaiser Family Foundation and Health Research & Education Trust. “Employer Health Benefits,” 2016      

[2] “How to Cut Your Health-Care Bill – Pay Cash,” The Wall Street Journal, February 2017

 

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

Jan 31
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Payor Contracting Negotiators

Payor Contracting Negotiators Yield Tangible Results for ASCs

By Payor Contracting No Comments

Clients often ask me, “Why should we hire a third-party negotiator to handle our ASC’s reimbursement from commercial payors?”  My most straightforward answer is simply, “It takes money to make money.”

There are three reasons why spending money on hiring a payor contracting professional is worth your pretty penny. First, perception is everything.  Second, time is money.  Finally, knowledge is important, but objectivity is essential.

Perception is everything

Payors quickly pick up on whether a negotiator is an experienced ASC industry professional. Experience working with payors throughout the country on behalf of numerous entities builds rapport with payors.  That rapport goes a long way toward easing the tension that can easily occur between parties with competing interests.  Because of this, the negotiator, although working on behalf of the ASC, can serve as an independent third-party mediator, creating common ground between the facility and the payor where meaningful discussion can take place.  Hence, broad specialized experience and rapport can be invaluable to your ASC in securing the desired perception with the payor.

Time is money

We’ve all likely heard the adage “time is money.”  Unfortunately, both lack of experience and knowledge will increase the length of the negotiation.  The cost to your center – incurred by delays in receiving optimal reimbursement – can be high as can the irrevocable expense associated with an opportunity foregone.  If the payor doesn’t need to educate a novice or get them up-to-speed on reimbursement issues, this will translate into time savings and, potentially, actual money in your ASC’s pocket.  Also, a third-party negotiator wears a specialized hat.  On the other hand, an administrator needs to wear many hats when running a facility.  This means third-party negotiators are more readily accessible and available to communicate with payors to ensure negotiations are optimally progressing.  As a result, they decrease the amount of time needed to complete negotiations.

Knowledge is important, but objectivity is essential

Physician stakeholders and your ASC’s administrator have knowledge about your facility like none other.  They know the strengths of the center and how each one benefits payors and their members. However, they typically don’t know enough about reimbursement trends and payor acumen to objectively assemble and present reimbursement proposals to payors.  Your ASC’s team is essential to equipping the negotiator with what s/he needs to form an evidence based negotiation.* However, they’re not in the best position to determine reasonableness of a request for reimbursement – they lack objectivity.

When it comes down to it, ask yourself if you are well equipped to handle any of the situations above.  Obtaining professional managed care contracting expertise may be one of the best decisions you make for your ASC and your time.

*Discussing the value and components of evidence based negotiations is beyond the scope of this blog posting.  However, it will be the single subject of a future posting

Dan Connolly – Vice President of Payor Relations and Contracting

Nov 15
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ASC Reimbursement

What Opportunities Can You Leverage to Increase ASC Reimbursement?

By Payor Contracting No Comments

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 

Oct 25
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Payor Contracting

Payor Contracting Tip: How to Determine Market

By Payor Contracting No Comments

First, let’s define what we mean by the market. In a general sense, the market is what customers are willing to pay for a product.  Along the same lines, your ASC’s market is what both governmental and commercial payors are willing to pay for the use of your facility.  In this sense, it is the reimbursement range your ASC receives from its most common payors for the services it most frequently provides.

Your ASC’s definition of market will most likely differ from that of your payors. Commercial payors may define the market as part of a state, an entire state, or even an entire region of the country.  However they define it, it will not likely favor your ASC.  Unlike the payor, who may organize data to support lower the reimbursement they offer your ASC, you’d be wise to organize your reimbursement data to help optimize your ASC’s reimbursement.

How Should Facilities Determine Market?

For starters, most regions typically have four to six major commercial payors. Think of them as the “major league payors.” The other commercial payors are usually “minor league payors.” Your minor league payors may reimburse at a higher rate, but your ASC may only provide care to a fraction of patients from these payors compared to the rest.  When looking at the market, it’s more important to focus on your major league payors – those whose members commonly fill your operating rooms.

Next, look at what each major league payor is reimbursing your ASC for the services you’re routinely providing.  This includes measuring how your ASC is reimbursed for its top volume procedures – the codes representing the bulk of your collective commercial volume.  I generally start by looking at the top 20-25 procedure codes then target the codes with at least 50% of the ASC’s procedure volume.  What you are seeking to obtain from this data is a snapshot of the most likely overall reimbursement composition for each payor. This is a statistic that can be compared to that of your other payors as well as with Medicare. By assembling the data reflecting reimbursement by payor and overall percent of utilization by procedure, you can calculate the average rate of reimbursement. This approach will allow you to define your ASC’s market.  In addition, after compiling reimbursement data, you can drill down to see if, and how, each payor reimburses differently by procedure which will help you establish practical renegotiation goals.

What Should Facilities Do With This Information?

Now that you’ve determined the market, what can you do with this information? You can use the data to leverage payors.  If necessary, you can even submit blinded comparative data to each payor you are dealing with, reflecting where each unfavorably compares to their peers.  The key is leveraging your data wherever, and however, it is advantageous to your ASC.  By navigating this correctly, you can start the process to achieve optimal reimbursement. At the very least, you get a picture of the fluctuations you experience for each procedure reimbursement by payor, while being armed with the ammunition necessary to prompt more productive payor contract negotiations.

Dan Connolly – Vice President of Payor Relations and Contracting