As Seen in ASC Focus
By Nader Samii
“ You have to change your thinking if you desire to have a future different from your present.”
― Germany Kent, print and television journalist, author, actor
Not long ago, when a patient needed total joint replacement (TJR) surgery, a long hospital stay was a given. Common thinking has changed, though, as more patients now are undergoing TJR procedures in the ASC setting.
Indeed, while TJR surgeries in ASCs were not an option just a few years ago, they are, in many instances, starting to be a preferred choice. In an ASC, patients typically benefit from a more intimate and personalized overall surgery experience, can recover in the comfort of their own home and have a decreased risk of infection. Surgeons also enjoy the efficiency, focus and scheduling flexibility of an ASC. Importantly, moving these complex and expensive surgeries from the hospital environment to an ASC presents a rare opportunity to have a financial win-win-win for patients, physicians and payers as it provides a lower cost option for patients, financial benefits for physician shareholders due to their ASC ownership, and significant cost savings for payers.
Of course, performing TJR surgeries in an ASC requires surgeons and nurses to think differently about how they do their jobs. First, selecting the right candidates for TJR surgeries in an ASC is key. The ASC setting is a viable, and often preferable, option for middle aged, non-obese patients who do not suffer other significant medical conditions and who have strong at-home support systems in place. Patients with contraindications such as body mass index (BMI) greater than 35, chronic obstructive pulmonary disorder, diabetes, high risk or history of deep vein thrombosis/pulmonary embolism and many other conditions are typically not viable candidates for an ASC.
Once the correct patients have been identified and scheduled for surgery in an ASC, it is critical that the other team members —front desk staff, billing personnel, managed care analysts and coders—also build a process that is focused on properly handing the business of total joints in an ASC.
Reimbursement for TJR
When it comes to TJR procedures, the financial stakes are quite high. While reimbursement for TJRs varies widely based on geographic region, specific payers, competition in the local market, and the background and skillset of the particular surgeons and ASCs under consideration, it is fair to say that a total joint replacement surgery reimburses approximately 8 to 10 times more than the average case in a typical multi-specialty surgery center. Given the wide-ranging nature of rates for these procedures, it is important to have a skilled and knowledgeable team negotiating your managed care contracts. This team will need detailed data at their fingertips to build a case that provides significant cost savings for the payer while simultaneously being highly profitable for the ASC.
Because of the dramatically higher dollar amounts for these procedures, ASCs need to establish and train staff members to follow operational and financial processes that are designed with the managed care contract in mind and optimize each step of the revenue cycle. In fact, because the procedures are so expensive, payers are increasingly thorough in their review of these cases and oftentimes more closely scrutinize the coding and billing involved.
In addition to ensuring that patients meet all pre-surgery requirements, front desk personnel must be thoroughly trained in all aspects of their job, including the following: financial counseling, the pre-authorization process, insurance verification and eligibility, providing an estimation of a patient’s financial responsibility, and collecting in advance or on the day of surgery the deductible, co-pay and co-insurance. There are many nuances to each of these functions, and a mistake in any of these areas could lead to significant expenses incurred by the ASC without obtaining any reimbursement at all. For example, while getting a pre-authorization for the surgery, it is paramount to obtain authorization for a range of relevant and possible codes as a surgeon might need to change course after surgery begins. Performing a procedure without the proper authorization will lead to a denial of the claim.
From a medical coding perspective, coders need to be aware of the relevant codes for each surgery and be cognizant of each patient’s specific health insurance contract and how it reads relative to reimbursement. For example, while the current procedural terminology (CPT) code will be the same under each contract, it is likely that the implant will be treated differently from contract to contract. Billing for these implants is extremely important, as they cost several thousand dollars each, depending on the specific implant used. The cost is much more than the average implant cost for most other procedures. Since large sums of money are at stake, ASC leaders should make sure that all their managed care contracts are readily available to their coders. Better yet, leaders might want to create documents that summarize pertinent information from each contract, so coders can easily find the specific information they need.
Each managed care contract is likely to stipulate specifically how an implant should be billed. For instance, an insurance carrier could have an HMO contract in place that stipulates it will pay the ASC a certain amount for the total joint procedure and would include the cost of the implant in that reimbursement. The same carrier’s PPO contract might, however, pay a certain amount for the procedure but separately reimburse the implant, as well as shipping, handling and tax.
The managed care contracts also will provide insight regarding exactly how each payer needs to receive documentation for the implant charges. Some payers will stipulate that they want to be billed electronically and subsequently request the implant invoice if needed. Others will provide a portal where the ASC will need to upload the implant invoice for each case or request a paper copy of the invoice for submission.
The sequencing of the codes also is critical. For example, a contract could state that it will pay 100 percent of the first line procedure, 50 percent of the second and 25 percent of the third. So, if the coder does not sequence the codes optimally, reimbursement will suffer. Mistakes in any of these areas will lead to denials, incorrect payments or underpayments.
By rethinking current practices and making necessary adjustments, ASCs will put themselves in a position to take advantage of the increased demand for total joint surgeries, the migration of total joint surgeries to the ASC setting and the increased likelihood that more payers—including Medicare—will cover total joint surgeries in ASCs in the future.
Indeed, t he demand for primary total hip arthroplasty (THA) and total knee arthroplasty is projected to grow 73 percent from 1.1 million in 2016 to 1.9 million in 2026. Further, in 2016, only 15 percent of these procedures, or 165,000, were performed in an outpatient setting. By 2026, 51 percent, or 969,000, will be performed in an outpatient setting. This is an increase of approximately 487 percent, according to Sg2 Research. The trend shows a clear increase in total joint replacements, with a significant movement of these complex procedures going from the inpatient to the outpatient setting.
While many commercial insurers already pay for total joint surgeries in the ASC setting, it also seems as if the Centers for Medicare & Medicaid Services (CMS) is warming up to the idea as well. CMS removed total knee and shoulder procedures from the inpatient only list in 2018. While the CPT codes were not added to the ASC approved list, it is expected that they could be added in the future as demand for these procedures continues to grow. Since the majority of TJRs are for Medicare patients, Medicare approval would dramatically increase the number of total joints performed in ASCs.
In the final analysis, ASCs need to be ready to make the clinical and business changes that will help them fully embrace total joint surgeries. Given the significant revenue and profitability associated with total joint surgeries, ASCs that are built to capitalize on this opportunity will significantly increase their top line, bottom line and equity value.
Nader Samii is the chief executive officer of National Medical Billing Services in St. Louis, Missouri. Write him at Nader.Samii@nationalascbilling.com.
This post was first published July 30, 2019 and was updated July 1, 2022.