DOING BUSINESS


Keys to Case Profitability Manage payers proactively and control costs BY ERIN PETRIE


As the cost of delivering healthcare continues to rise, ASC reimbursement is getting tighter, neces- sitating even closer cost


monitoring and a proactive stance on payer contracts and collection. While ASCs might have been able to balance a few cases that did not make money within their total case load in the past, today’s healthcare environment puts profitability pres- sure on every single case. For exam- ple, given the nursing shortage, cen- ters now pay nurses as much or more than they would be paid at a hospital, yet the hospital’s reimbursement is 50 percent higher. And that’s just one element driving a need to carefully manage all the factors that impact ASC profitability.


So, where should you start? Maximizing case profitability


comes down to proactively manag- ing two key activities: understand- ing payers and reimbursement and, of course, controlling costs.


Understanding Payers and Reimbursement In our practice, we have found a three-step process helps ASCs tackle payers and reimbursement on a case- by-case basis: 1. Review the case to be sched- uled: identify


the applicable


codes and pin down the overall cost of the procedure, including implant costs.


2. Verify patient insurance: con- firm if the patient’s insurer is a contracted payer and whether the insurance reimburses for the ap- plicable codes. Do they reimburse on the implants? Based on this


information, determine potential profitability of the case.


3. Verify patient eligibility and coverage: review benefits and de- ductible accumulations to deter- mine the patient’s financial liabil- ity and counsel the patient upfront.


Following this process can help ASCs understand case profitability in advance and avoid taking on cases that are likely to result in a net loss. Let’s look at two examples. The first is a pain management


case involving a permanent neuro stimulator implant. The procedure spans three applicable CPT codes, plus implant costs. The ASC admin- istrative team identifies costs to per- form the case at $27,000 including the implant, plus staff and supply costs of $2,300 for a total cost of $29,300. The patient has a contracted insurer that reimburses $4,000 plus implants paid at 110 percent for this type of case, with reimbursement expected to be $33,700. The posi- tive variance of $4,400 between the ASC’s cost and the reimbursement


make it profitable to proceed with the procedure. The second example is a bit less straightforward. In this case, the patient needs a total hip procedure and is insured by Medicare. Costs are $6,250 including the implant plus $2,500 for


staff and supply


costs for a total of $8,750. Contract reimbursement is $8,900, which at first glance looks like a positive vari- ance of $150. However, the recom- mendation is not to proceed with the case. Why? With Medicare, the patient would normally be required to pay 20 per- cent of the $8,900 as co-insurance but in this case, the patient also has Medicaid as a secondary insurer, so they don’t have to pay the co-insur- ance. Here’s the problem that faces the ASC: as it turns out, Medic- aid won’t pay the 20 percent either because the 80 percent paid by the primary insurance is still more than Medicaid would have paid for the procedure. Scenarios like this under- score the need to really understand your payers. In this case, the dynamic


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