A Planning Playbook for Opening a New Orthopedic ASC
The ASC market continues its rapid growth. In 2023, roughly 116 new ASCs opened in the U.S., many of which were orthopedic-specific in nature....
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By: Jenn Carbin
Published: 10/10/2007
The anchor you used in the rotator cuff repair costs $900. Your third-party payer won't reimburse you for it. Not one dime. So that tiny piece of titanium metal with suture attached to it just drained all of the profit out of the case.
"Pretty soon you'll stop doing that procedure," says Cheryl Munsinger, RN, BSN, CNOR, the director of surgical services at Good Samaritan Hospital in Kearney, Neb. "Maybe you don't give raises the next year. Maybe you buy used instrumentation because you can't afford new."
One way to restore the profit to your orthopedic cases is to negotiate carve outs for such expensive implants as washers, screws, anchors and plates. Even though the trend among payers is to limit reimbursement by cutting additional payment for high-cost supplies and implants, the people we talked to say it doesn't have to be this way.
Tips you can use
Before Ms. Munsinger joined Good Samaritan Hospital in 2003, she was director of clinical services at an ASC for seven years. She's all too aware that orthopedics can be a loss leader for both hospitals and freestanding facilities. Hospitals who treat a lot of Medicare patients (two-thirds of Good Samaritan's patients are Medicare-covered) get only 80 percent of the Medicare-allowable amount. "For a total joint replacement, the DRG barely covers all of our expenses," she says. And payers routinely balk at reimbursing ASCs for implants. Here's her advice for circumventing these challenges:
Inside the mind of a payer
As younger baby boomers look to orthopedic surgeons and new technology to help them remain active and youthful, concerns continue that payers will not come through with reimbursements, hindering that growth. You have some power to affect the climate, though.
Darryl Galman, regional director of managed care for United Surgical Partners International, worked as a contracting administrator with Cigna, Aetna and Blue Cross before joining USPI. "I was actually the person on the other side of the table who was saying no to providers when they were asking for carve outs," says Mr. Galman. "My job was to dole out as little money as possible."
Now that the tables are turned, his job is to negotiate the highest possible reimbursement for the surgery centers in his territory. Mr. Galman says that many go wrong when approaching payers in not "fully understanding their needs and their own business." Here are his suggestions to consider when preparing to make your case. All involve knowing your business.
Building your case
"Payment for implants can be the deciding factor in whether a case is profitable," says the director of a surgery center who asked that we not use her name, fearful she'd jeopardize ongoing carve-out negotiations with a third-party payer.
Her surgery center does a high volume of orthopedics cases. As is typical, the payer has reimbursed the ASC similar to Medicare's, which means that much of the time it doesn't reimburse for orthopedic implants. At a recent meeting, the insurer asked the administrator to list her top three concerns. Nos. 1, 2 and 3 were identical: Getting reimbursed for expensive implants, namely the following:
The administrator and her team brought the following documents to the meeting to demonstrate how the payer had come up short in the past and how, as a result, the center had lost money:
She's optimistic about the results of the meeting. "They were very receptive to what we had to say. I feel the meeting was very positive."
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