Responding to Shifts in the Healthcare Outpatient Market

Responding to Shifts in the Healthcare Outpatient Market

How to Mitigate Risk and Evaluate Growth Opportunities 

By Sean Conway and Evan Elmore

UnitedHealth Group released its quarterly earnings report earlier this month and several changes in coverage caught our attention, particularly as they pertained to outpatient services.

United is to begin denying claims for certain types of services performed in hospital outpatient departments (HOPDs). They are the first major payer to do so. This will inevitably lead to an increase in care at other outpatient settings, such as Ambulatory Surgery Centers (ASCs).

This post will discuss why this should be of concern to HOPD invested health systems and how they can prepare to mitigate their risk. We’ll also consider how ASC management companies can take advantage of this opportunity for growth. 

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The Big Picture

Most outpatient procedures can be provided across multiple clinical settings, and although the choice of outpatient site for many services has no discernible effect on patient care, traditionally, it could significantly impact payment for such services. 

Medicare has already started to push for site neutrality so that services performed in hospital facilities cost close to the same as they would for the same service performed in a physician’s office or ASC. As discussed in the July 2nd issue of The Weekly Gist, the Supreme Court backed Medicare’s agenda earlier this month when they declined to hear an appeal challenging Medicare’s 2019 regulation calling for “site-neutral payment” for services provided by hospitals in outpatient settings, clearing the way for the rule’s implementation.

UnitedHealth is the first payer to take such a strong stance on this topic, pushing further than even Medicare, to cut back on higher site of service fees in HOPDs. United’s bolder move will mean a denial of coverage for certain services billed by an HOPD, including primary care, surgical care, and imaging.

And while United is the first payer to make this move, they certainly will not be the last. Their move signals a coming change in care delivery. For hospital systems that have relied on higher HOPD site of service fees, it will be time to rethink this strategy.

How Health Systems Can Mitigate Risk

This news could be a point of concern for health systems, especially those accustomed to receiving higher payment for services rendered through HOPDs. Providers will need access to data that can help them understand the reimbursement differential for commercial payers between HOPDs and ASCs.

With Stratasan’s Market Reimbursement Analyzer (MRA), providers will have access to outpatient institutional billing. This institutional data module provides reimbursement rates for HOPD and ASC services. Equipped with this intel, planners and strategists will be able to do the following:

  • Compare reimbursement rates between their HOPDs and ASCs by payer. Determine how much they’ll be losing in the HOPD space and how much there is to gain by investing further in the ASC space. How much higher could they negotiate for ASC reimbursements?
  • See across service lines and determine if there are areas where they need to cut back or make a change. If there’s a service line they can only make work at an HOPD, do they have to cut those offerings, or can they shift that service elsewhere? 

Providers accustomed to billing at a particular rate at HOPDs, and who’ve set annual budgets to expect this revenue, will need to adjust their strategy. They’ll want to consider if it’s worth the investment and effort to start opening their own ASCs. This may be their first time shifting into this space, or the first time they’ve really evaluated this opportunity. If it’s determined that ASCs are not part of their future strategy, how can they shift volume to make up for a potential loss? 

How ASC’s Can Leverage this for Growth

For ASC management, this is clearly an opportunity for growth. There’s a chance for them to expand their offerings in markets where they’re already working, or move into new markets where there’s space for additional ASC providers. As they consider their options, it’ll be helpful to have access to the right market data, and Stratasan’s MRA tool can be helpful here as well. With MRA, ASC planners will be able to do the following:

  • When considering new market expansion, identify which markets offer the best reimbursement rates
  • If they’ve identified a market they want to move into, review payer reimbursement rates and how they compare with each other
  • See how other payers in the market are reimbursing for services so they can negotiate for the best, most competitive rates 
  • Review year-over-year comparisons to know when there is movement in ASC reimbursement rates as more patients shift to ASCs for care 

While there’s no question this is a prime opportunity for ASC growth, it’ll be important for that growth to be data-informed. With the right insights, educated planning can be done with a higher opportunity for success.

The Takeaway

The Market Reimbursement Analyzer was developed to level the playing field in reimbursement discussions. By creating unprecedented transparency into the commercial reimbursement landscape, both providers reevaluating their HOPD presence and ASC management companies looking to expand will have access to the data they need for informed growth planning.

To learn more about the MRA tool, and see a demo of its capabilities, schedule time to speak with one of our product experts today.

Article by Sean Conway, National VP of Sales for Stratasan, and Evan Elmore, Senior Consultant, Innovation for Ancore Health

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