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ASC Revenue Cycle October Industry News Wrap-Up

Each month Regent Revenue Cycle Management (Regent RCM) explores the top news and headlines affecting the healthcare industry. This month in the news: The new MACRA final rule released by the Centers for Medicare and Medicaid Services (CMS) contains aspects that will impact ASCs; A new editorial weighs the pros and cons of “condiminiumizing” ASCs; Key specialties coming for ASCs next year; And a Deloitte survey reveals that a large number of physicians are still paid under fee-for-service payment model.

MACRA Final Rule Released

On Friday, October 14, 2016, the Centers for Medicare and Medicaid Services (CMS) released its final rule that established the new Medicare payment methodology for physician services furnished under Medicare Part B, known as the Quality Payment Program (QPP). The rule contains many components that will impact ASCs. The QPP was enacted in 2015 as part of the Medicare Access and CHIP Reauthorization Act (MACRA) and has two participation options for physicians: The Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). Reporting for the first year of the QPP begins in 2017. Click here to read more.

ASCs: To Be or Not To Be “Condominiumized”

In an editorial, Stephen Sheppard, CPA, COE, reveals the pluses and minuses around the concept of “condominiumizing” ambulatory surgery centers (ASCs). This model involves separating a single physical ASC plant temporally among two distinct legal entities. For example, ASC-A could operate on Monday, Wednesday, and Friday, while ASC-B could operate on Tuesday and Thursday. Sheppard outlines the opportunities and obstacles. Click here to read more.

Key Specialties Coming for ASCs in 2017 

Ambulatory surgery centers are performing higher acuity cases and presenting opportunities for the healthcare system to provide quality care for patients at a lower cost. Paul Eiseman, vice president of business development at Regent Surgical Health, shares insights into specialties that have fared well in the ASC space and what is in store for 2017. Click here to read more.

Deloitte Survey: 86% of Physicians Are Still Paid Under Fee-For-Service Payment Model

Deloitte’s “2016 Survey of U.S. Physicians” survey has revealed that many physicians are reimbursed under a fee-for-service model instead of the value-based system in which providers are paid according to outcomes. Click here to read more.

ASC Billing & Collections

Joint-Venture Managed Care Contracting: A Guide to Success

There are several steps necessary to ensure a profitable transition from an independent ambulatory surgery center to a partnership with a hospital:

  • Identify who will lead the negotiation by payor and set your goals. Also identify who will be the hospital contact assigned to work with the ASC contact/contractor.
  • Create a Proforma
  • Work within the confidentiality confinements of hospital outpatient department (HOPD) contracts and current ASC contracts
  • Identify/prioritize contract review for renegotiation.
  • Create a spreadsheet showing the term dates of all ASC current contracts, allowing enough time to renegotiate new rates and minimize time spent out of network
  • Evaluate charge master and make changes, ensuring payor compliance to charge master increases
  • Allocate resources so the top 5-7 contracts are all worked simultaneously. Turnaround time is critical to ensuring Proforma objectives are attained
  • Contact payors as a representative of the hospital to notify them of the change in ownership and to initiate negotiation
  • Seek recommendations on draft proposals from hospital
  • Maintain timely access to key hospital staff

The difference in hospital rates versus ASC rates are often a two to five times multiplier. You can gain aggressive increases while still offering a differential to HOPD rates and not causing the payor to become entrenched and walk away.

Payors will often pushback when faced with a request for substantial increases. Some of the initial responses you are likely to get include:

  • We will not pay you more for the same service
  • We will not pay you above what the market bares for ASCs
  • We will redirect patients to other ASCs
  • Our insurance division has challenged us to contain healthcare costs and we don’t have the ability to pay you 40-60% higher rates
  • How would the physicians and hospital like to respond to the community on why their premiums and out of pocket costs are increasing?
  • We don’t understand this trend for hospital JVs and are not going to pay these rates to an ASC

When considering your response, think about what leverage you hold and what pressure points you can create:

  • ASC
    • Even with increased rates the ASC is offering a significant savings to HOPD rates. The joint venture will also facilitate a movement of cases due to change in ownership from the less cost effective HOPD to the more cost effective ASC.
      • Make sure to capitalize on the addition of new specialties. Payor will not know and will have difficulty modeling
    • Consider the future if the ASC does not make it as an independent entity. Will the hospital become a 100% owner in six months to a year, moving the ASC to true HOPD rates operating under the same tax ID number as the hospital?
    • Know the local competition – where can the payor move the HMO cases and at what cost to their member satisfaction?
    • If you are in a market with Independent Practice Associations (IPAs) holding risk, initiate contact to discuss the financial challenges the ASC is facing and the move to add a hospital partner to bolster rates and keep them a viable part of community.
      • Point out that the Payor is rewarding inefficiency, paying a huge differential between HOPD and free standing ASC rates, and that the ASC is simply trying to stay in business. The threat to the IPA at risk is the loss of a high quality, efficient, lower cost ASC. Moving their cases to an HOPD will impact their expenditure within a cap and influence their risk pools
      • Follow similar strategy for any local large employers in the market
  • Physician Partners
    • Direct Payor Marketing
      • Identify key surgeons whose movement to or away from an HOPD will impact a payor.
      • Is that physician a good candidate to meet with the payor?
    • Risk Tolerance of Partnership
      • If a payor is not willing to pay what you need and you go Out-of-Network, will the physicians take those few cases “only” to the HOPD?
        • Work with the physicians’ business office and collect data on number and type of cases that would be relocated to the hospital. Note difference in payments to make greater the impact and send updates to payor.
      • Ask physicians to let members know about loss of access to surgery center and have the patient call member services to complain.

A dedicated focus and a collaborative approach to JV payor contract negotiations will help ensure a smooth and profitable transition.