Written by: Frank Armocida, MD, Surgery Center at Pelham, Bill Hazen, Administrator/CEO, Surgery Center at Pelham and Nader Samii, CEO, National Medical Billing Services
At the Surgery Center at Pelham, careful patient management leads to successful total joint replacement surgeries in the outpatient setting, while payer management leads to profitable financial outcomes.
“Walking is the best medicine.” – Aristotle
Since making the decision to satisfy patient demands in 2014, we have performed approximately 200 total joint replacement (TJR) surgeries at the Surgery Center at Pelham in Greer, South Carolina. Careful analysis after each procedure has allowed us to optimize our outpatient care methods, as well as the complex coding, billing and patient education process we found necessary to provide quality care and maintain profitability.
The benefits of moving TJR surgeries to the outpatient setting are numerous. Patients are normally discharged in three to four hours after the surgery and recover in the comfort of their own homes without unnecessary services and surprise bills. The fact that the same exact procedure costs about one-fourth as much at our ambulatory surgery center (ASC) as it would in an inpatient setting allows patients to concentrate on their recovery rather than being burdened with financial worries.
With the steady increase in healthcare costs, high deductible insurance plans and clinical advantages, it’s not surprising that the patient demand for outpatient TJR surgeries is rising. Primary total hip arthroplasty (THA) and total knee arthroplasty (TKA) are projected to grow 73% from 1.1 million in 2016 to 1.9 million in 2026. While only 15%, or 165,000 total procedures were performed in an outpatient setting in 2016by 2026, this number will rise to 51%, or 969,000 total procedures. This represents an increase of approximately 487% over just ten years, according to Sg2 Research.1
We are not only proud of the fact that we are able to offer TJR procedures, but we’re also thrilled to set and meet patient expectations. Numerous factors attribute to the fact we have achieved 99% patient satisfaction rates. Perhaps most important, we’ve prioritized the education and concerns of cost-conscious patients as well as thoroughly addressed pre- and post-operation care.
Learning to walk before you run and continually striving to improve is key when deciding to implement total joint procedures in an ASC setting. After each surgery, we carefully review the entire patient case, note what could have gone better, and rectify any factor found in order to streamline and perfect the process.
We found early on that negotiating with vendors for the price of implants was not only possible, but also extremely beneficial
We’re aware that patients are attuned to high-cost healthcare and emphasize transparent pricing. Patients have the option to visit our website to receive an estimate of their cost of care based on a given surgeon’s treatment plan and specific benefits provided by the insurance payor. We found early on that negotiating with vendors for the price of implants was not only possible, but also extremely beneficial, for the surgical payment process both as a healthcare provider and patient. We’ve used the same vendor for all implants, which allows us to negotiate a lower cost based on volume. We bill for implants at cost.
Patient selection is a crucial process for ASCs to address when performing TJRs. With more data at our disposal, healthcare facilities can — and should — follow stricter guidelines while deciding which individuals are appropriate candidates for the procedure. Patients who are healthy enough can receive the exact same surgery and medications in an outpatient center that they would as inpatients, except possibly the anesthesia.
Patients can recognize true outpatient benefits after they receive the same quality post-op care, only at a more aggressive, accelerated rate with as little as three hours recovery time prior to discharge. Our staff then follows up with patients via a phone call – the day after surgery and once a month for six months after that. Two days after the operation, surgeons will see patients in their office to change the dressings and reassure the patients in their early post-op recovery process.
Strategies to help ensure quick release:
Less pain decreases the need for prescription narcotics, which could be beneficial considering our nation’s current opioid crisis. Individuals seen in an outpatient facility are at lower risk for exposure to infections, which is often a concern in hospitals. Since beginning total joint replacement procedures on optimized patients, we’ve had a total of zero infections at our surgery center.
While it’s important for TJR surgery to be successful from the patient’s perspective, it must also be successful—or profitable—for us as a business. Therefore, medical coding and billing procedures need to be accurate and efficient, while creating cordial working relationships with insurers to ensure optimized reimbursement.
Thanks to profit-sharing with all employees, the Surgery Center at Pelham has lower staff turnover than most facilities. Giving employees a vested interest can encourage reduced cost and waste. Both our surgeons and business office staff are experienced and knowledgeable, creating a more streamlined process for clinical and front-desk procedures.
Perhaps the most significant of the business office staff’s responsibilities—one where it’s critical not to lose that knowledge base—affecting patient satisfaction and an organization’s bottom line are coding and billing. One year before performing our first total joint procedure, we began working with third-party insurers and employers to develop clinical protocols in hopes of standardizing care and generating quicker pre-approval from payors for these types of surgeries. In fact, insurance companies have since used our proposed standardized protocol to judge the processes of other healthcare organizations in various regions.
It’s no question the business office personnel are integral to coding, billing and proper reimbursement. Naturally, they need to ensure that patients meet pre-surgery requirements, but they also need to be thoroughly trained in financial counseling, the pre-authorization process, insurance verification and eligibility, providing an estimate of the patient’s financial responsibility in addition to collecting the deductible, co-pay or co-insurance in advance or on the day of surgery. Indeed, each of these functions encompass numerous other components that can ultimately affect a patient’s health and an organization’s revenue. If the staff doesn’t have comprehensive knowledge of these areas, costly errors are likely to be made.
Medical coders must know each patient’s specific health insurance contracts through and through. Not only do they need to know the relevant codes for each surgery, but how particular implants and procedures are reimbursed. Every contract uses the same common procedural terminology (CPT) codes, for example, but how they determine implant reimbursement will likely be different depending on the contract. Creating summaries of pertinent information from each contract can enable coders to easily and quickly find needed information.
Each managed care contract is likely to stipulate exactly how an implant must be billed. For example: An insurance carrier’s HMO contract might outline a specific amount be paid to the ASC for a total joint procedure, with the implant cost included in that reimbursement amount. The same carrier’s PPO contract may pay a certain amount for the procedure, with separate reimbursement for the implant and even additional reimbursement for shipping, handling and tax.
Managed care contracts will also stipulate what documentation each payer requires for different implant charges. Some payers require electronic billing and then may request the implant invoice later. Others may have a portal where the ASC is required to upload each implant invoice or may request paper copies of invoices.
When the payments are received, staff members need to ensure that the payments match the amount stipulated in the contracts. Most importantly, they need to flag underpayments. For example, when a payment was received for $18,000 but the contract stipulated $22,000, staff members need to note this underpayment and follow up. In addition, sometimes payers will lump payments into one line on the EOB. These payments must be posted by line item to ensure that each code is reimbursed properly. Because total joint surgeries are big ticket items, it’s important to conduct a monthly audit to ensure that each procedure was coded, billed and paid correctly. If you uncover any discrepancies, drill down to see where the mistake originated, and then file an appeal if warranted. Pay particularly close attention to implant billing, since implants are expensive items that could represent 25% to 30% of your overall reimbursement and payment for them is closely tied to very specific contract stipulations. Remember, your center has to buy these implants upfront–so if you are not paid correctly, your ASC will take a hard-dollar loss.
The devil is in the details, as the saying goes. Even a seemingly insignificant mistake could lead to denials, incorrect payments, underpayments or even no payment at all after we have already incurred significant expenses. Whatever the case, the more knowledge of contract details an ASC’s staff has, the less likely it will be to delay the billing process and lower potential reimbursement. For Surgery Center at Pelham, knowledgeable patients and skilled staff, as well as a proactive team work approach to patient education and clinical procedural modification, has led to successful and profitable total joint replacement surgeries for patients in an outpatient setting.
1. Vizient. Outpatient Joint Replacement: An Unnecessary Concern or Market Reality? https://newsroom.vizientinc.com/newsletter/research-and-insights-news/outpatient-joint-replacement-unnecessary-concern-or-market-rea
This post was first published July 8, 2019 and was updated July 1, 2022.