ASCs lose thousands with payers’ creative’ reimbursement strategies
Watch out for a Dear Provider’ letter in the mail
(Editor’s note: In this first part of a two-part series on financial nightmares, we tell you about some outpatient surgery providers who have had their payment methodologies changed without their knowledge. In next month’s issue, we’ll tell you about providers that added new procedures, only to find out they were losing a significant amount of money.)
- A surgery center’s procedures go from being reimbursed at 125% of Medicare to 55% of Medicare.
- A procedure that makes up half of a center’s volume is shifted by a payer from Group 8 reimbursement to a lower paying Group 4.
- An ear, nose, and throat surgery center discovers it is losing $90,000 over three months because a payer decides it will no longer pay multiple procedures.
- A physician group realizes it will lose $1 million in combined revenues between its practice and its surgery center due to changes in reimbursement methodology that are proposed by payers.
Although these may sound like nightmares you’d have during contract negotiation times, these shocking actions actually happened to surgery centers and office-based surgeons, according to sources interviewed by Same-Day Surgery. The major reason? Payers are changing methodologies without fully notifying surgery programs, warns I. Naya Kehayes, MPH, CEO and principal at Millennium Health Consulting in Issaquah, WA. Kehayes spoke on the importance of understanding changing payment methodologies at the most recent annual meeting of the Federated Ambulatory Surgery Association (FASA).
"The big message I’m trying to send is that you have to make sure you understand what the methodology is — because it may not be what you think it is — and understand that the financial implication could be devastating if the payer represents a significant portion of the provider’s market share," she adds.
Specialty Surgery Center in San Antonio saw its cataract reimbursement dropped from Group 8 to Group 4 reimbursement. "It essentially cut the reimbursement in half," says Steve Blom, administrator of the center, which is owned by National Surgical Care in Chicago.
This event is not isolated, Kehayes explains. "It’s rampant at all types of facilities," she says. Almost all of her company’s clients have faced a major change from a payer, Kehayes says.
The problem with "creative" reimbursement tactics is occurring mostly with the larger payers, outpatient surgery sources report. "It seems that all the insurance companies in the country went to one big meeting and were presented a strategy plan on how to cut reimbursement and keep providers, including surgery centers and doctors, out of money," says Thomas J. Pliura, MD, JD, physician and attorney at law in Le Roy, IL.
The problem is growing at the same time payers have made reimbursement systems so complex that it’s difficult to understand them, Blom notes. "That’s intentional. It’s no secret that they’re making the payment methodology vague, then change it, so it’s hard for people to keep up," he says.
In one common scenario, a payer sends a vague letter addressed to "Dear Provider" or "Dear Medical Director," or it may be in the form of a news bulletin. In some cases, the letter is photocopied. The letter mentions that there has been some changes in the wording of the contract but doesn’t specifically mention payment or reimbursement. Or the letter may indicate that payment is being raised from, for example, 125% of Medicare rates to 135% of Medicare rates.
The letter may attach a sample grouping of 10 CPT codes that indicate the payment for those codes are going up. However, the payer may be changing the grouper methodology so the actual payment for procedures overall is going down. Another scenario is a sampling of procedures in which nine CPT codes actually are increasing in reimbursement, and one is going down.
"To the average person who’s not that keen on looking at details of the methodology, he or she looks at the sample and says, This looks good,’" Kehayes says.
However, the sampling may not be representative of all the payer’s changes, she warns. When language in a letter from the payer is arbitrary, it may not be clear whether the payer is referring to the Medicare grouper or something else. "A lot of people see grouper’ and think Medicare grouper, but they have to realize there can be a huge difference between the Medicare grouper and the payer groups, so it’s important that you get that clarified," Kehayes explains.
Often "Dear Provider" letters are thrown away, put in a staff member’s nonurgent pile to review, or they are filed by the business office without going through an administrator. Subsequently, a business office collector may notice that payments are not being paid at the same rate. When the surgery center analyzes the payments, managers notice that the payer has changed procedures to different groupers. When the payer is contacted, the response typically is that the surgery center was notified several months ago.
Another payer strategy is to send out payer reimbursement changes at the same time that Medicare sends out changes, "but it may have nothing to do with [Medicare]," Kehayes warns.
Payer representatives may say they are following Medicare’s fee schedule, based on a percentage of Medicare, "but that is based on the fact that Medicare had the cataract procedure in Group 8," Pliura says. They’ve downcoded the procedure in their grouping system, so the same CPT code is getting less payment than what Medicare would pay, he explains. If ASCs signed a contract with that plan, not knowing the coding has been downcoded, and the contract says they can’t balance bill, they’re out of luck, he says.
Often patients are surprised to find out their insurance company isn’t paying for all of the cost of a procedure, Pliura adds. "Commercial payers can charge employers commercial rates and expect to pay reimbursement that will be less than Medicare and Medicaid would pay," he notes. "That’s a crazy point."
Some payers are refusing to pay for multiple procedures. When the provider questions them, they say they have their own established set of edits. That scenario happened at Decatur (IL) HealthCare, a multispecialty surgery center.
"What I do is that I request a copy, under the Freedom of Information Act, of those edits that are established, and they do have to provide them," says Marla Christensen, CPC, office manager/coder.
Other providers report that some payers are not reimbursing for medications or supplies. "They’re paying for main procedures, and that’s it — and that’s a very new development," she adds.
Sources
For more information, contact:
- Steve Blom, Administrator, Specialty Surgery Center, 8122 Data Point Drive, Suite 100, San Antonio, TX 78229. Phone: (210) 614-6059. E-mail: [email protected].
- Marla Christensen, CPC, Office Manager/ Coder, Decatur HealthCare, 1770 E. Lake Shore Drive, Decatur, IL 62521. Phone: (217) 424-1021. Fax: (217) 424-1027.
- I. Naya Kehayes, MPH, CEO and Principal, Millennium Health Consulting, 371 N.E. Gilman Blvd., No. 320, Issaquah, WA 98027. Phone: (425) 657-0494. E-mail: [email protected]. Web: www.millenniumhealthconsulting.com.
- Thomas J. Pliura, MD, JD, P.O. Box 130, Le Roy, IL 61752. Phone: (309) 962-2299. E-mail: [email protected].
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