By Scott Allen, Vice President, Managed Care Contracting, National Medical Billing Services
With the shift to value-based healthcare, more procedures are being performed in ambulatory surgery centers (ASCs). In fact, according to the United States Ambulatory Surgery Center Market Report 2019, from 2015-2022, the proportion of outpatient cases performed in ASCs is expected to increase across most service lines with the largest jump (10%) to occur in spine procedures. If an ASC is considering adding new and complex procedures such as orthopedics, spine and cardiology, it is critical to take into consideration how the center will be reimbursed for those procedures. The first step is to review the managed care contracts. It is good to have a firm understanding of the methodologies being used. For example, ASC administrators frequently do not dive deep enough to see how the whole case would be adjudicated. For example, multiple reimbursement methodologies being used in the ASC space, makes reimbursement more challenging. Each payer has their own process and the ASC must fit its reimbursement within the payers’ parameters.
While the methodologies listed below are not everything being used within the ASC space, these are some of the more prominent processes.
Percent of Billed Charges – One of the oldest reimbursement methodologies, percentage of billed charges is used primarily by non-governmental payers. It is a simple formula where the total charges on the claim are multiplied by the contracted percentage. But, beware because some payers will put in thresholds or have a second adjudication method to protect them paying the whole percentage of bill charged.
Groupers – The Centers for Medicare and Medicaid (CMS) created a list of allowable procedures and a payment schedule with nine categories or groups to reimburse ASCs for the procedures they performed. Groupers reimburse providers a lump sum to take care of a patient over the course of a disease or clinical episode of care. This has become a common methodology with some commercial payers adopting and adapting this methodology. When it comes to contract negotiations for this type of contract it is critical to make sure the ASC is getting paid appropriately for these complex total joint or spine surgeries.
Ambulatory Payment Classifications (APC) –Ambulatory payment classifications (APCs) is the methodology the government uses when it pays facilities for outpatient services through the Medicare program. CMS created the Outpatient Prospective Payment System (OPPS) for hospital outpatient services and assigns individual services codes to APCs based on similar clinical characteristics and costs. While this started out as the federal government’s methodology, APCs have been considered for state programs and other private health insurers.
Enhanced Ambulatory Payment Groups (EAPG) – This methodology, provided through 3M, seems to be growing in popularity across the country. It has been created specifically for the complex ambulatory environment of today. EAPGs describe all services that would happen during a patient visit and is not reliant on fee schedules which makes implementation easy. As a result, many state workers compensation plans and Medicare plans are purchasing this methodology. EAPG makes Medicaid reimbursement more transparent by allowing for more equality for similar services in ASCs.
Having a clearer picture some of the more common reimbursement methodologies being used and how they work will be beneficial the next time managed care contract negotiations arise. ASCs should analyze their contracts on a regular basis to determine what makes sense for their individual center. Be sure to do the necessary research for a comprehensive understanding of common practice patterns for that physician or group to make sure there is a solid carve out in place.
Be mindful when reviewing contracts. Do not rush through the contract. Take time to understand the payers and their methodologies.
This post was first published March 2, 2020 and was updated July 29, 2020.