Carve-outs are not a new phenomenon but are becoming more prevalent in the area of ASC care. It may be tough for ASC practice management to negotiate a carve-out with payers, yet if ASCs enter discussions fully prepared, results are often positive.
The trouble is, it’s difficult to know everything there is to know about the careful dynamic between the ASC and the health plans charged with their own requirements. That’s where abeo’s practice management department comes in.
“Practices have so much to worry about when running the business that they don’t have the time to understand why payers make amendments or change costs,” said Adriaan Epps, abeo’s vice-president of practice management. “They have to be able to understand the methodologies of the health plans. We can navigate this for them and help them get through a lot of the nonsense.”
When Is a Carve-Out Appropriate?
According to an article in Becker’s ASC Review, when an ASC has patients who fit into high-acuity profiles it’s appropriate to consider carve-outs. Basically, any procedures that are expensive, unique, have variable costs and which run across a whole gamut of specialties are worth including in a carve-out.
As medical technology advances, there is a need for high-quality, lower-cost care and ASCs are often able to provide this for a large variety of patients. Payers are very aware of this fact, and this gives ASCs an advantage when they initiate negotiations for a carve-out. However, because at this point medical insurance organizations are so involved in becoming familiar with new healthcare reform rules and regulations, ASCs need to have good cases to offer when negotiating. Carve-outs often open up new territory for payers, and many of them are reluctant to step into uncharted terrain.
Gather the Data
Offering data to payers when negotiating carve-outs is extremely important, and this is where a company such as abeo comes into its own. When ASC clients wish to bargain with payers, they are able to request information from abeo that will assist in discussions and abeo can offer advice on the best ways to approach various payers. Data that is useful for carve-outs includes:
- Costs. These are the fixed and variable costs involved in procedures, as well as the charges that need to be recovered for medical devices that are going to be used or implanted. Data on average costs per patient and per care episode are also useful.
- Rates. ASCs need to present their current rates as well as the rates of hospitals and, on the whole, ASC rates are usually lower. This a good leveraging tool, and an area where, to extract this information, an ASC needs to have excellent and accurate billing and coding methods.
- Patients’ needs. Certain procedures lend themselves to the ASC environment, where surgeons have a greater say and influence over patient prep and immediate aftercare. In fact, figures show that patients who have been attended to at an ASC testify to a 92 percent satisfaction rate.
- Outcomes. ASCs are known for their innovative practices and surgical techniques as well as their excellent infection control. These are all factors that help to keep prices down as they allow surgeons to operate more efficiently and safely.
Start with Single Cases
If payers are reluctant to begin carve-out negotiations, the way forward may be to introduce single cases. Agreements made over single cases, in the view of payers, are not binding for multiple cases and thus put insurance plans under less pressure. Negotiating single-case agreements is a good way to illustrate the fact that the ASC in question keeps costs under control, and, if they employ a company such as abeo, that they have effective business services in place.
Single-case agreements are an excellent way to educate payers over the details of what will be involved in particular procedures. They provide a starting point for initiating carve-outs when the time is right.
Check Existing Contracts
Payers normally will not countenance modifying or adding carve-outs to existing contracts, but this does not stop ASCs from checking what is in place and preparing for negotiations to begin when contracts are up for renewal. If carve-out data shows that costs can be lessened to a large degree it may be worthwhile discussing them with payers while contracts are still running.
In addition, contracts with different payers should be compared so that when a payer is approached, the ASC has figures to quote on what is offered across the marketplace. It’s also useful to find out what percentage the ASC services are of the payer’s total business, as if certain procedures form a significant proportion then the ASC may have more bargaining power.
Building good relationships with key personnel in payer organizations is important, as they are often more willing to consider carve-outs when they know that an ASC is a reputable and responsible body whose aim it is to increase savings for patients and payers.
“Health plans err on the side of cost, and that’s strictly a business decision,” Epps said. “It’s just the nature of the way things run for them.”
abeo services with regard to billing and coding as well as keeping up to date with the latest codes and regulations is invaluable as it frees up ASC staff to get ready for carve-out negotiations.
Making sure that a carve-out is appropriate, extracting and preparing data, and checking existing contracts are all essential when negotiating carve-outs that are of benefit to ASCs, patients, and medical insurance companies.
Becker’s ASC Review, ASC Implant Carve-Outs: Opportunities, Challenges and 4 Best Practices.
Ambulatory Surgery Center Association, What is an ASC?