A presentation discussing overall national trends, hospital v. ASC comparisons, ASC “value pitch” to payers, defining price through transparency

1. July 26, 2018
Presented by:
Robert S. Paskowski
Consulting Principal
PACIFIC NORTHWEST ASC SYMPOSIUM
Payer Trends in the ASC Industry

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Firm Overview

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Our Professionals
We have consultants from
coast to coast
PYA Office or Consultant Location
Firm Resources
Physicians
Registered Nurses
Hospital Administrators
Payer Experts
Compliance Officers
Revenue Cycle Experts
Clinical Coding Experts

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Agenda
 Industry Trends
 Hospital Outpatient Department (HOPD) v.
Ambulatory Surgery Center (ASC)
 Value Proposition
 Price Transparency
 Payer Disputes
 Discussion and Audience Experience

5. Industry Trends

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Payer Industry Trends
 Payers Providers
 Movement toward value-based payments
 Consumers demand less costly care
 Payers narrowing and tiering their networks

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ASC Industry Trends

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ASC Industry Trends
 Hospital and physician alignment
 Continued growth trend of surgeries moving from
inpatient to outpatient
 Continued growth trend of outpatient (OP) surgeries
moving from hospital to ASCs
 Increase in number of ASC-approved procedures
(Medicare)

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Movement from Hospital Outpatient to ASCs
Source: Advisory Board ASC Services Outlook Primer - April 2018.

10. HOPD v. ASC

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Medicare Reimbursement
 Surgeries performed in HOPDs are paid by
Medicare under the Outpatient Prospective
Payment System (OPPS) using a grouping
system known as the Ambulatory Payment
Classification (APC)
 Surgeries performed in an ASC are paid by
Medicare under the ASC fee schedule

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Conflicting Market Reports?
 Becker’s reports that ASCs receive 67% of HOPD rates1
 Medicare’s rates are 92% higher in HOPDs than ASCs2
 Up from 85% in 2017
 Procedures performed in ASCs cost Medicare 53% of the
amount paid to HOPDs3
CONCLUSION: The difference in reimbursement between
HOPDs and ASCs depends on the mix of services
1) Becker's – 5 things to know about Medicare’s ASC vs. HOPD Payments. April 26, 2016.
2) MedPac 2018 Report. Chapter 5: Ambulatory Surgical Center Services.
3) Advancing Surgical Care Association and Regent Surgical Health whitepaper.

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Case Study #1
Identify cases which
could be transferred into
an ASC setting
Determine contribution
margin impact for both
HOPD and Freestanding
settings
Scope
Cases identified utilizing
ASC Addendum EE
35% reduction
percentage utilized
Analysis
HOPD (commercial
payer reduction only)
Freestanding
(commercial and
Medicare payer impact)
Deliverable
Service Line
MCR Freestanding
ASC Allowable
MCR HOPD
Allowable
ASC as a
Percent of
HOPD
Orthopedics 991,139$ 1,651,586$ 60.0%
Neuro 334,196$ 481,065$ 69.5%
ENT 1,749,254$ 1,992,140$ 87.8%
Weighted average reduction percentage:
25.5%

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Top 20 ASC Services
• Top 20 services as published in March 2018 MedPac report and based on 2016 Medicare ASC Claims Data. PYA identified CPT codes and the 2018 Medicare allowed amounts.
Top 20 Services performed in ASCs - 2018 MedPAC report
Rank Surgical Service
CPT
code
2018
NATIONAL
Medicare
ASC Rate
2018 NATIONAL
Medicare HOPD
Rate
ASC as a
% of
HOPD
1 cataract surgery w/ IOL insert, 1 stage 66982 $991.95 $1,921.09 51.63%
2 upper GI endoscopy, biopsy 43239 $387.30 $743.49 52.09%
3 colonoscopy and biopsy 45380 $487.78 $936.39 52.09%
4 lesion removal colonoscopy (snare technique) 45385 $487.78 $936.39 52.09%
5 inject foramen epidural; lumbar, sacral 62282 $350.15 $672.18 52.09%
6 diagnostic colonoscopy 45378 $369.84 $709.98 52.09%
7 after cataract laser surgery 66821 $254.19 $487.98 52.09%
8 injections spine; lumbar, sacral (caudal) 62323 $283.06 $543.38 52.09%
9 inject paravertebral: lumbar, sacral 64493 $350.15 $672.18 52.09%
10 colorectal screen, high-risk individual G0105 $369.84 $709.98 52.09%
11 colorectal screen, not high-risk individual G0121 $369.84 $709.98 52.09%
12 cataract surgery, complex 66982 $991.95 $1,921.09 51.63%
13 upper GI endoscopy, diagnosis 43235 $387.30 $743.49 52.09%
14 cystoscopy 52000 $294.63 $565.60 52.09%
15 lesion removal colonoscopy (hot biopsy forceps) 45384 $487.78 $936.39 52.09%
16 revision of upper eyelid 15822 $817.02 $1,568.43 52.09%
17 inject spine, cervical or thoracic 62320 $283.06 $543.38 52.09%
18 injection procedure for sacroiliac joint, anesthetic G0260 $283.06 $543.38 52.09%
19 upper GI endoscopy, insertion of guide wire 43266 $2,849.76 $4,293.62 66.37%
20 injection procedure for paravertebral joint, cervical or thoracic 64490 $350.15 $672.18 52.09%

15. Value Proposition

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ASC Value Proposition
Demonstrate economical value
Share patient satisfaction results
Align physicians with payer network
Share quality results

17. Price Transparency

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Price Transparency – ASC Study1
Background
 8 ASCs provided their list price for April and May 2016
 Tracked results one year later on such metrics as patient
volume and patient satisfaction
Results
 Patient volume increased 50% after implementing price
transparency
 4 ASCs reported a 30% midrange revenue increase
 5 ASCs reported an increase in patient satisfaction and
engagement
1 Study by Johns Hopkins University published on 7/8/18 by MedPage Today.

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Price Transparency
What is “price transparency?”
Who wants to know?
What is its use?

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Claim Processing Formula
Name Description Value Basis
Provider Charge Provider develops its charge
master; same charge
regardless of payer
Historical
Market Factors
Benchmarks
Less:
Contractual Allowances
Difference between what the
provider charges versus what
a payer is willing to allow
Equals:
Allowed Amount
Amount that is accepted by
payer
Provider/Payer
Agreement; “Usual
and Customary”
Less:
Payer Responsibility
Amount due from payer based
on patient’s benefit plan
Documented on
Explanation of
Benefits
Equals:
Patient Responsibility
Amount due from patient after
payer responsibility
Member Evidence of
Coverage

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What’s the Price?
$3,000
(1,000)
$2,000
(1,600)
$400
Example: Knee scope; Commercial health plan pays 80%
Provider Charge
Less: Contractual Allowance
Allowed Amount
Less Payer Responsibility
Patient Responsibility
ASCHOPD
$4,500
(2,000)
$2,500
(2,000)
$500

22. Payer Disputes

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Common Payer Disputes
Denied claims
Out-of-network providers
Medical necessity

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Common Denial Reasons
• Member eligibility
• Improper coding
• Duplicate billing
• Provider network
participation
• Pre-authorization
rules
• Claim filing timeliness
• Benefit rules
• Coordination of
benefits
• Place of service
• Non-covered services
• No fee schedule for
provider and/or
service

25. PYA, P.C.
800.270.9629 | www.pyapc.com
Robert S. Paskowski
Consulting Principal
(865) 684-2857
bpaskowski@pyapc.com