The Changing Face of ASC Reimbursement

Ambulatory surgery centers are facing new and important challenges for 2009. We had barely mastered the 2008 Medicare conversion to the modified Outpatient Prospective Payment System (OPPS), when the Centers for Medicare and Medicaid Services (CMS) published the proposed changes for next year. Managed care is becoming stronger and less likely to negotiate fair rates. Supplies are increasing in price due to the changing economy. Staffing is becoming more difficult as employees will not travel as far because of the high price of fuel. As these trends continue, ASC management teams must be fully aware of the changes in reimbursement, explore the specific challenges they will confront, and determine how to deal with them and still maintain a profitable center.

Medicare

On July 3, CMS issued its proposed rule for 2009. As expected, this is the second year of the four-year transition. The changes in reimbursement rates are not necessarily the straight 50/50 rate that most of us expected. It’s important that you are aware that some procedures are being paid at a lesser rate, rather than increasing as some CPTs are being reclassified as no longer device intensive or are changed to office-based reimbursement.

Table 1 below illustrates the proposed additions of nine surgical procedures to the ASC approved list. These are a mix of previously excluded procedures and newly added CPT codes:

Table 2 shows the procedures that have been proposed to be reclassified from surgical to office-based procedures:

In addition, there are changes in the procedures designated as device intensive, including two additional codes. There are also six codes that have been reclassified to surgical from device intensive, as their reimbursement has dropped to where it no longer meets the specific requirements (implant is at least 50 percent of APC allowance).

It’s important to continue to monitor ancillary services announcements as new services are added, deleted, changed on a quarterly basis. Sign up for notification of quarterly provider updates here. During the first quarter, there were four new medications or drugs added (April 2008). During the second quarter (announced July 2008), there were four additional covered services added (see Table 3 below).

Managed Care

Managed care is evolving into larger conglomerates as the consolidation of companies continues. It is apparent that they have decided that strength is in numbers. In most areas with most companies, there is less room for negotiation and it seems that more of them have developed a “take it or leave it” attitude. Contract negotiations are now more difficult and take longer to accomplish (usually between three to six months).

This trend of large health insurers acquiring smaller competitors is expected to continue. The 2007 AMA Update, Recent Competition in Health Insurance: A Comprehensive Study of U.S. Markets, revealed that Wellpoint and United have a combined membership of 67 million covered lives and control 36 percent of commercial health insurance nationally. Other recent consolidations include:

• Multiplan and PHCS
• Cigna, MVP and Great West
• Aetna, PPOM (MI) and Sloan’s Lake

A few MCOs are following CMS by combining implant and procedure reimbursement (state specific); however, be sure they are allowing sufficient reimbursement for the device. In addition, we have also noticed the following trends:

• No allowance for multiple procedures
• Minimal reimbursement rates
• No implant allowances
• No carve-out of high-cost procedures
• Contract prices forcing patients or employers to choose large-deductible plans

Additionally, MCOs are limiting out-of-network services by implementing more restrictive guidelines for providers. We have had reports that insurance companies are going to great lengths to put pressure on patients for going to out-of-network providers, as well as threatening contract termination to physicians who refer to non-participating surgery centers. If patients have no stated out-of-network benefits, ASCs are finding that the companies require multiple notifications of intent to treat, as well as making low site-of-service payment allowances and paying them directly to the patient.

When you are negotiating contracts, suggest using new Medicare rates as baseline. However, contract negotiations this year reveal MCOs are evaluating Medicare’s change, but few have taken any positive steps toward changing to the new APC groups and continue to use a smaller set of groupers, usually based on their own fee schedule and rules for fee bundling (which you are not allowed to see).

For those MCOs that have their own editing criteria, we suggest you take the time to collect data on special bundling edits and compare to Medicare-accepted edits, such as the Code Correct Initiative (CCI). Build a special-edit database and watch that all edits are consistent. This will assist you in eliminating unnecessary appeals; however, if you find that they are inconsistent in these edits, we suggest you appeal to the highest level. This takes some extra work but seems to be the only way to determine correct payments as specifics in bundling are usually not included in your contract.

Other Factors Affecting Optimum Reimbursement

As long as we are discussing the changing faces of payor reimbursement (over which we hold little power), let’s talk about areas that we control that can be improved upon.

Fee Schedule

• If you base your fee schedule on Medicare APCs, make sure your fee schedule updates every time there is a proposed rate update from CMS. A fee schedule whose allowances on certain procedures are less than what your payors allow is a sure-fire way to fail financially.
• Establish a minimum fee (example: $1,200 to $1,500). When you are basing your fees on Medicare, some of the new office-based reimbursements are quite low and your fee could end up being insufficient to cover the cost of making a patient chart.

Example: 17003 — Destruction of two to 14 Pre-Malignant Lesions

2009 Proposed Allowance — $3.22 — Fee based on 350 percent of Medicare = $11.27

• CMS’ combination of procedure and implant in many CPTs make it more difficult to determine a reasonable fee. For those classified as device intensive, one way of accomplishing this is to subtract the amount allotted for the implant, then multiply the portion allowed for the facility fee times the agreed upon mark-up percentage. Then add back in the device reimbursement amount.

Example: Code 62361 — Implant Spine Infusion Pump

2009 Proposed Allowance — $10,737.43

Estimated allowance for implant = $8,500

Estimated allowance for procedure = $2,237.43

$2,237.43 X 300 percent = $6,712.29 — Facility Fee Amount

$6,712.29 — Facility Fee

$8,500.00 — Implant Amount

$15,212.29 — Total Fee

• When determining whether to add a device intensive case or any other procedure that contains an allowance for the implant, be aware that Medicare’s implant allowance does not always cover the total implant cost.

Example: 63685 — Insert/replace spinal neurostimulator

Spinal neurostimulator cost — $15,000 to $18,000 (depending on type)

Medicare allowance 2009 (including procedure) — $14,366.35

Financial Policies/Procedures

Every facility should have a full array of financial policies and procedures approved by the governing body, understood by the business office and enforced by the facility’s management team. They should include the following:

• Insurance
• Medicare
• Workers’ Compensation
• Liability
• Cosmetic/Plastic
• Self-Pay (not cosmetic)
• Payment Plans
• Multiple Procedure Dollar Cap
• Non-Covered
• Discounts
• Collections Date of Surgery
• Charity Care
• Deductible/Co-Pay
• Out of Network
• Secondary Insurance
• Special Fee Schedules

Example: Policy and Procedure for Self-Pay Patients – Areas to address

• No money, no surgery
• Charity care (if joint-venture, match hospital criteria)
• Promissory note – 30, 60, 90 days
• Payment plans (minimum $/mon)
• Collection agency guidelines

Business Office

Business office positions directly affecting reimbursement (not including management):

• Scheduler: Important source of patient information for insurance verification and correct and timely billing.
• Admitting clerk (receptionist): Directly involved in up front collections of deductibles and copays, also copies of insurance cards.
• Insurance verification specialist: Important link to correct payments.
• Patient financial counselor: Necessary to contact patients prior to date of surgery to explain financial responsibility.
• Coder/biller: Instrumental in obtaining optimum reimbursement.
• Payment poster/collector: Direct link to correct payments and chasing denials.

Employing the right persons for these positions is key. Important attributes include experience, self-motivation and being a team player. Job descriptions and appropriate understanding of the financial policies are important in making your center financially viable.

Physician Documentation

To prevent loss of income from lack of documentation, recommend to your physicians that they pay close attention to the following areas:

• Bilateral or multiple procedures.
• Preoperative and postoperative diagnoses compatible to procedure.
• Identification of surgical site, e.g., fingers, toes (needed for modifiers).
• Specific areas treated, e.g., knee compartments, etc.
• Implant information (screws, plates, anchors, grafts, pain pumps, neurostimulators, etc.) such as how many used, what size.
• Ancillary procedures performed; injections/drugs (amount/strength), X-rays.
• Deviation from normal, e.g., longer than usual, cancelled after anesthesia, etc.

Billing Process

The following are a few suggestions for your billing department. The most important being the necessity of staying up-to-date.

• To prevent loss of revenue, it is suggested coders code all procedures and use the process of elimination through appropriate CCI/AAOS edits.
• Follow Medicare N1 edits — these may change quarterly — again this is part of the update process that is so important to follow.
• Contact private payors about carrier directives which announce changes.
• When coding/billing Medicare for device-intensive procedures do not code or bill procedure and implant separately.

Example 1: Separate billing for procedure and implant

CPT 62361       your fee $3,200

HCPCS C1891       your fee $8,500

Medicare allows only $3,200

TOTAL $11,700

Example 2: Bill for procedure only

CPT 62361 your fee $11,700

Medicare allows $10,157

• Audit all areas of your billing process regularly; coding, claims submission, payment posting and collections. Provide feedback on results to your staff as part of their ongoing education process.

Planning Ahead

In 2009, ASCs must begin data reporting for certain quality measures. At this time, suggestions for these quality measures (Becker’s ASC Review June 30, 2008) provided by a committee formed of ASC industry leaders include:

• Patient burn
• Prophylactic IV antibiotic timing
• Patient fall in the ASC
• Wrong site, side, patient, procedure, implant
• Hospital transfer/admission

After the quality measures have been approved, CMS will provide guidelines on participation. However, non-compliance will result in reduction of reimbursement rate. Comments on the proposed rule were accepted until Sept. 2, with the Final Rule to be issued Nov. 1.

The most important thing to remember is to remain current on all of the changes. Industry publications such as this and others are full of information regarding our industry. These publications also have an online newsletter (free) and are great sources of breaking news.

To get more information on the upcoming 2009 changes, click here. At the top of the page choose “CMS-1404-P Proposed Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates.” Other good sources of information are here and here.

Caryl A. Serbin, RN, BSN, LHRM, is president and founder of Surgery Consultants of America Inc., and Serbin Surgery Center Billing, LLC.