Manage costs, contracts to survive reimbursement
Stay on top of HCFA’s updates
Reimbursement levels will continue to decrease and present challenges to same-day surgery managers because Medicare and other payers are focusing on outpatient procedures, says MaryAnn Edwards, RN, MSA, supervisor of ambulatory surgery at Henry Ford Health System in West Bloomfield, MI. This focus makes controlling costs more important than ever, she points out. "Our hospital has set up purchase and acquisition teams that group similar departments together to look at supplies and equipment to see if we can standardize supplies," she says.
Standardizing or reducing the number of different supplies and vendors enable the facility to take advantage of greater discounts for volume purchasing and avoid special orders, she explains. "The savings give us more money to spend on new technology," she adds.
Purchasing technology will be an even greater challenge for same-day surgery managers who are watching budgets shrink, says Beth Derby, RN, MBA, executive vice president at Health Resources International, a West Hartford, CT-based management and consulting firm for ambulatory surgery centers. Managers of surgery centers owned by physicians will feel the greatest challenge; their physicians are accustomed to purchasing what they want because they own the center, she says.
"Doctors at hospital-owned same-day surgery programs are experienced with rejection," she adds. "These surgeons don’t expect to get every piece of equipment they request, but physician owners will have to make tough decisions." The manager will have to be prepared with data to show which specialties’ new technology will offer the best return for the program, she adds.
Reimbursement has resulted in and will continue to generate a lot of changes for same-day surgery programs, says Penny Dykstra, RN, CNOR, director of outpatient services at Saint Joseph’s Hospital of Atlanta. "The changes in reimbursement initiated by [the Health Care Financing Administration] in August 2000 for hospital-based outpatient programs were the biggest changes since the inception of Medicare," she says.
The challenge for hospital-based programs has been the switch from reporting based on diagnosis-related groups to the use of common procedural terminology (CPT) codes, with payment differences based on how the procedure is coded, she says. "Outpatient programs have typically relied on manual data collection that is not efficient with the new prospective payment system," says Dykstra. Every same-day surgery program should have or get automated systems that make data collection simpler and more accurate, she suggests.
Change is the one constant in the HCFA system that Dykstra can safely predict, "HCFA will continue to monitor the hospital outpatient system and make changes, so managers need to stay on top of updates," she says. Annual reviews and updates are required by Congress, adds Dykstra. The best way to find out about updates is to visit the HCFA web site (www.hcfa.gov), suggests Dykstra. "Visit this site regularly," she adds.
Freestanding ambulatory surgery centers also can check the HCFA web site for information and keep an eye on what is happening for hospital-based programs, suggests Dykstra. "While the rules for freestanding programs will differ, a manager will get an idea of the trends in reimbursement," she says.
Make sure coding is accurate
The earliest HCFA can implement ambulatory payment classifications (APCs) for outpatient centers, based on the old data used for hospital-based programs, is January 2002, but an implementation date no earlier than January 2003 will give HCFA an opportunity to use new data to develop rates, says Kathy Bryant, JD, executive director of the Federated Ambulatory Surgery Association in Alexandria, VA. In the meantime, managers of freestanding ambulatory surgery centers or office-based programs should focus on knowing their costs and making sure their coding is accurate, says Bryant. More importantly, she cautions managers not to purchase materials, software or services that promise to help outpatient program managers prepare for APCs.
"The information upon which these materials are based is the two-year-old proposed rules that received over 6,000 comments when originally published," she points out. There is no way anyone can accurately predict what the final rules for outpatient centers will be since HCFA is constantly changing the rules for hospital-based programs and gathering new data, she adds.
Proposed rates can be used in the decision-making process for a new piece of equipment or a new service if the manager remembers the rate may change, says Bryant. "Look at the proposed rate, but plan on a 20% margin of error to determine if this is a good addition to your program," she adds. Remember that HCFA will be changing reimbursement rates regularly when you negotiate managed care contracts, says Bryant. "If the contract refers to Medicare rates, be specific about which rates," she suggests. Make sure the contract allows for updated rates, the addition of CPT codes, and new procedures approved by Medicare for same-day surgery programs, she adds.
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