Three decades ago, ASCs didn’t have to negotiate to receive full reimbursement for out-of-network services. By definition, out of network meant that providers had not negotiated a contracted rate for reimbursements. Therefore, they should be paid 100% of their rate.
But those days are gone. Now, providers have to negotiate with vendors used by payers to reduce the out-of-network charges. These negotiated payment offers are single-case rate agreements. If ASCs are not actively involved in negotiating these rates, then they might end up with as little as 20% of their bill charges.
“Out of network should be reimbursed at 100% of charges because there is no contract, but over the years the payers have implemented all of these bill-minimization tactics,” explains Richa Singh, executive vice president of sales and account management at Collect Rx in Bethesda, MD. “If you can put together a strategy and have the resources, data, and time, then negotiations will be successful.”
Singh answers ASCs’ frequently asked questions about out-of-network collections. Here are some of the most frequently asked questions:
- What’s the number-one key to successful negotiations?
“The number-one key involves persistence and data,” Singh says. “It’s hard to get data, but everyone can control persistence.”
Vendors make money from negotiations for out-of-network costs, and they’re paid on a commission basis.
“They hope to send over the lowest reimbursement level, and they hope the provider forgets to do anything about it,” Singh says.
ASCs can combat that by using persistence and making collections of out-of-network bills a priority. Someone should be a designated negotiator at the ASC, and that person should make repeated phone calls to the vendor, if necessary.
“Respond to every letter, counteroffer, and every email,” she says. “We call it a single case agreement.”
When appealing a payment, insurance companies will use delays and roadblocks, hoping providers will grow frustrated and give up. The answer to this is to not give up.
“The insurance companies are counting on the providers giving up or walking away from the negotiation, and if that happens, they basically win,” Singh says.
- How do payers determine what to pay a provider?
“The problem is that out-of-network reimbursements are all over the place with, seemingly, no rhyme or reason,” Singh explains. “What providers don’t know is it’s not the insurance company that decides on it, it’s the employer group who purchased that plan and determines what type of reimbursement their own employees get.” Employers who pay more for their policies will offer plans that pay more to providers.
“But if they pay less for the policy — and that’s what’s happening a lot recently because employers are cutting costs — then the provider gets reimbursed lower,” Singh notes.
ASCs must collect data about the charges. For example, the same insurance company might have paid at 80% on an identical case six months before. Now, the company wants to negotiate 50%. With data, an ASC can make the case that 80% is what it should be paid.
“I’ve only met two providers who have kept track of their negotiations,” Singh says. “Data is another key to weave into negotiations.”
The third-party vendors keep their own data and use it to obtain the lowest reimbursement from ASCs, she notes. “They keep track of everything that’s negotiated, so they know that Mary at the office gives 40% discounts, while Bill gives 50% discounts,” Singh says. “So, they’ll try to get Bill on the phone instead of Mary.”
- Why should I negotiate offers from third-party vendors when I expect to be paid 100% of bill charges?
“In a perfect world and in the early 1990’s, this is how it used to be,” Singh says.
But now, insurers will reimburse providers at only a fraction of the charge, and if providers do not negotiate, then payers will price it at whatever they want, which typically is close to Medicare rates and not 100%, she explains. This leaves ASCs with two difficult choices: spend staff time and energy negotiating and persevering, or don’t negotiate and receive a far worse reimbursement.
“These negotiations occur before the payer makes a payment to the provider,” Singh says. “Basically, if you just say you expect to receive 100% reimbursement, the third-party vendor will take the case back to the insurance company and have them price it at whatever they want.”
- Won’t negotiating aggressively ruin my relationship with third-party vendors?
Vendors employed by insurance companies make money off the discount they negotiate — and they’ll pull all kinds of tricks to ensure the biggest discounted rate.
“They literally will make it seem like they’re best friends with the provider,” Singh notes.
Here’s one example: A negotiator for the third-party vendor would research a provider’s business office manager on social media.
“She found out the business office manager loves shoes, so the negotiator looked up shoes before calling her, and then called and talked with her about shoes for 10 to 20 minutes,” Singh recalls. “Then, the negotiator reimbursed the provider at 20% of their bill charges.”
It’s manipulative, but this is how the negotiator and her employer are paid — by obtaining as low a reimbursement as possible, Singh says. “They’re compensated on how much money they save their clients, the insurance companies.”
ASCs are not their customers, the customer is the insurance company, and ASCs should not forget this. Even when ASCs hire a contractor to handle these negotiations for them, the third-party vendors will try to find a way around that relationship.
“One of our negotiators used to be a vendor on the other side of the insurance company, and she would sabotage us, using the sweetest little voice where you could believe anything she says,” Singh says. “She’d tell our clients, ‘I tried to call CollectRx five times and they never responded. I think you’re too small for them,’ and she had not tried to call us once.”
When working with a collection contractor, ASCs should be sure to refer all calls to the contractor and ignore what the vendors say. “We know the tactics they’re playing,” Singh adds. “It keeps you on your toes.”
- Is it better to decline an offer if you think the reimbursements are too low?
“Yes and no,” Singh says. “It depends on the policy type and how it would be reimbursed otherwise.”
This is where an ASC needs data. “It’s important to keep track of the different insurance companies you’re negotiating with,” she says. “Sometimes, you will have to accept a lower amount if the policy is limited, like if it allows 110% of Medicare.”
If the policy says ASCs have to accept the usual and customary rate, this is a vague term that is open to interpretation and negotiation, she notes.
“If the policy says reimbursement is based on usual and customary, then payment is whatever they say it is,” Singh explains. “So, you need to have data to prove, ‘Hey, no, this is what you decided was usual and customary, but last time you reimbursed this type of case at X, and this time you’re trying to give us a much lower amount.”
When Singh discusses this topic at national conferences, it’s typically at this point that someone will shout out, “Why would I ever want to be out of network?”
Her answer is, “That’s my point. It’s difficult. It used to be easier, and people think it should be easy, but it’s not anymore.”
Insurance companies have gotten tougher on out-of-network costs, and ASCs must be more persistent.
“In the end, it will make you more money with significantly higher-than-network rates and Medicare rates, and that’s why someone would want to be out of network,” Singh says.
But it’s not as easy as it once was.
- Why take the trouble to negotiate when the ASC doesn’t encounter that many out-of-network cases?
Some ASCs will not care because they don’t see volume in this area. But suppose the ASC handles 300 cases per month, five of which are out of network, Singh asks.
“We tell them to always negotiate out-of-network bills because the opportunity to increase the reimbursement is so wide,” she says.
For example, suppose each out-of-network case is worth $10,000. By not taking time to negotiate, the ASC is offered 20% and accepts only $2,000 per case for a total of $10,000 out of the $50,000 in surgery services. But if the ASC employs a strong negotiator who can bring that 20% up to 80% on the $10,000 claim, then the five cases will bring in $40,000, which is $30,000 more than if the ASC had not entered into negotiations, Singh explains.
“There’s so much room for improvement there that they should at least try, because even one bill could have a hefty effect,” she says. “Any additional money is worth it here.”