While out-of-network ambulatory surgery centers in New Jersey have historically benefited from very lucrative reimbursement levels, insurance companies have recently announced their intention to tie OON reimbursement of surgery centers to Medicare. In addition, the New Jersey Insurance Transparency Bill (also referred to as the out-of-network bill), which recently passed the Assembly, would impose additional requirements on out-of-network ASCs. [link to story] Larry Trenk, president of the N.J. Association of ASCs, shares four thoughts on the impact of OON changes and regulations.
1. Hospitals could be impacted. 2011 will be a watershed year for New Jersey surgery centers, Mr. Trenk predicts. As out-of-network reimbursement is compromised and curtailed, many surgery centers will negotiate in-network contracts and physicians may bring more cases to surgery centers because of the increased insurance coverage. "This could directly and indirectly impact hospitals because they may see cases migrating to ambulatory surgery centers.," Mr. Trenk says. "You may see hospitals saying, 'We're being impacted by this. Maybe it's time for us to consider an equity stake in a surgery center.'"
2. More centers will move in-network. With OON reimbursement levels facing significant reduction, physicians involved with OON surgery centers will see fewer and fewer patients because those patients increasingly lack out-of-network coverage, Mr. Trenk says. Physician-owners who have historically enjoyed a good return on their investment may start to consider moving in-network. "You can negotiate an in-network contract and hopefully offset your losses with additional case volume," he says. "You'll probably try that for a while to see how it plays out. Most contracts people sign are for a term of three years and may be worthwhile assuming the center can capture additional physicians."
3. ASCs must change their reimbursement expectations. Whether centers decide to move in-network or stay OON, Mr. Trenk says ASC owners must adjust their profit expectations. While reimbursement levels will depend on the payor, he says expectations cannot be predicated on past results. "You need to create expectations that are still positive but are not exactly what you experienced before," he says. "You cannot expect to receive past levels of reimbursement, nor should you accept Medicare rates." Centers that have historically ignored operational costs because of fat reimbursement rates may be in for a surprise, he says. "The sky is not falling, but [these changes] do force people to reconsider their business model and make decisions reflective of future financial considerations and factors."
4. Physician recruitment will present a challenge. ASCs that decide to move in-network should consider recruiting more physicians to boost case volume, Mr. Trenk says. But recruitment itself may be harder than in previous years: According to Mr. Trenk, the state has become somewhat saturated with centers, and recruiting physicians is becoming increasingly difficult. Another possibility is for centers to choose to merge in the future to become more attractive to potential physicians and improve profits.
1. Hospitals could be impacted. 2011 will be a watershed year for New Jersey surgery centers, Mr. Trenk predicts. As out-of-network reimbursement is compromised and curtailed, many surgery centers will negotiate in-network contracts and physicians may bring more cases to surgery centers because of the increased insurance coverage. "This could directly and indirectly impact hospitals because they may see cases migrating to ambulatory surgery centers.," Mr. Trenk says. "You may see hospitals saying, 'We're being impacted by this. Maybe it's time for us to consider an equity stake in a surgery center.'"
2. More centers will move in-network. With OON reimbursement levels facing significant reduction, physicians involved with OON surgery centers will see fewer and fewer patients because those patients increasingly lack out-of-network coverage, Mr. Trenk says. Physician-owners who have historically enjoyed a good return on their investment may start to consider moving in-network. "You can negotiate an in-network contract and hopefully offset your losses with additional case volume," he says. "You'll probably try that for a while to see how it plays out. Most contracts people sign are for a term of three years and may be worthwhile assuming the center can capture additional physicians."
3. ASCs must change their reimbursement expectations. Whether centers decide to move in-network or stay OON, Mr. Trenk says ASC owners must adjust their profit expectations. While reimbursement levels will depend on the payor, he says expectations cannot be predicated on past results. "You need to create expectations that are still positive but are not exactly what you experienced before," he says. "You cannot expect to receive past levels of reimbursement, nor should you accept Medicare rates." Centers that have historically ignored operational costs because of fat reimbursement rates may be in for a surprise, he says. "The sky is not falling, but [these changes] do force people to reconsider their business model and make decisions reflective of future financial considerations and factors."
4. Physician recruitment will present a challenge. ASCs that decide to move in-network should consider recruiting more physicians to boost case volume, Mr. Trenk says. But recruitment itself may be harder than in previous years: According to Mr. Trenk, the state has become somewhat saturated with centers, and recruiting physicians is becoming increasingly difficult. Another possibility is for centers to choose to merge in the future to become more attractive to potential physicians and improve profits.