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What ASC’s Need to Know About Bundled Payments in a Value-Based Setting

 

Low cost and high-quality service delivery are the hallmarks of outpatient care in today’s value-based setting. Patients are out searching for providers that offer the best care at the lowest possible cost while payers are also driving care in-network due to the high financial burden of out-of-network arrangements.

To remain competitive, surgery centers must come up with strategies to increase reimbursements that will also be beneficial to patients and payers. One game-changing strategy that ASC’s can use is bundled payments. Unlike the traditional fee-for-service model, bundled payments are well suited for care delivered in today’s value-based environment.   

Bundled payments provide greater incentive for patients to approach ASC’s for surgeries and for payers to move more patients to surgery centers. Patients can avoid having to bear extra financial burden in the form of co-pays, deductibles, and high out-of-pocket payments connected to typical fee-for-service payment arrangements. Payers also get to enjoy significant cost reductions from bundled payments compared to the fee-for-service model.

Surgery centers will experience an increase in case volumes as more companies move into the bundled payments markets, especially if insurance companies decide to adopt it as an alternative payment strategy. 

However, bundled payment arrangements are yet to gain significant traction in the ASC space. The trend is poised to become mainstream as an alternative reimbursement strategy. Alternative payment models, which include those bundled, currently account for 30 percent of industry-wide payments made by Medicare.

Bundled payments could be retrospective or prospective. For prospective bundles, the provider is paid a fixed amount upfront by the insurer for all services to be rendered to the patient. The provider is therefore responsible for any additional cost incurred during administering treatment.  

But the most widely-adopted model used by hospitals is retrospective bundled payment. This operates in a similar fashion to the fee-for-service payment in that payers reimburse providers for the claims raised for the services offered to patients under their program. The payment made by the payers is then compared to the agreed bundled target price and any discrepancy is adjusted for. Providers will be reimbursed for payments made below the target price while payments made by payers above the target price will be retrieved.

ASC’s are better positioned to offer bundled payment arrangements than hospitals. This is because they can provide procedures offered at hospitals at high prices for a much lower rate. Also, it is easier for them to monitor their costs unlike hospitals who deal with a larger number of patients; complicating the task of tracking their cost. 

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