Reviewing Your ASC's 2022 Performance: 10 Areas of Focus
Angela Mattioda, Sr. Vice President of RCM Solutions & Client Experience
Ambulatory surgery centers hoping to achieve a successful year are always well-served by reviewing their surgery center's financial performance from the prior year. Below I identify 10 areas ASCs should focus on when examining their 2022 performance and planning 2023 activities. If you haven't already conducted such an analysis, it's not too late, but don't wait much longer. If you performed an analysis, I recommend reviewing the areas discussed to see whether there are metrics or activities you may have overlooked or did not give adequate attention.
1. Chargemaster increases
ASCs should ensure all planned chargemaster increases occurred. This is sometimes an overlooked activity. When adjusting your chargemaster, always stay within the allowance per your contract, which is usually a 3%-5% annual increase. Although such an increase may not affect a lot of your contracts, it will for any that pay based off a percentage of charges. Failing to implement those increases will lead to lost revenue.
2. Contract renegotiations
It's always a good idea to look at your managed care contracts at the end of the year. One area to pay close attention to concerns when contracts renew in the upcoming year. If you intend to renegotiate your contracts, build in adequate time to prepare for and engage in the renegotiations. Beginning your preparation as far as six months in advance is worthwhile.
3. New specialties/procedures
When evaluating your contracts, other areas to focus on concern whether you have coverage — and appropriate coverage at that — for any specialties or procedures you added during the previous year. This information is critical during renegotiations and new contract negotiations.
For example, if your ASC started performing total joint replacement procedures in 2022, do your contracts include total joints and include them with fair reimbursement? If your ASC added a pain management physician who performs a high volume of neurostimulator procedures, those bring with them high out-of-pocket costs for centers. If neurostimulator procedures are included in your contracts but fall into a grouper, look at carving out those procedures to better ensure adequate payment that more than covers your costs.
4. Payer mix
How did your payer mix change in 2022? Was there an increase in out-of-network cases? A spike in commercial cases? An increase in managed care cases? Digging into your payer mix should help determine whether you need to take any number of steps, including modifying the types of cases performed in your ASC, focusing more on specific case/payer types, and beginning negotiations with a payer.
5. Case volume
When reviewing year-over-year changes, always look at case volume. If your case volume increased, that's likely good news, but it also raises questions. If you're performing your ASC billing in-house, how are your staffing levels? Are you appropriately staffed or contracted with an ASC billing company like Surgical Notes to support this increase that occurred throughout the year and your case volume projections for the upcoming year?
On the other hand, if case volume decreased, where and why? Is it decreasing because you lost a provider? Is it declining because you're not getting as many referrals? There must be an explanation as to why your case volume was down. Determine the cause(s) and what you need to do to get that volume back up … assuming the high-volume cases are profitable. What do I mean? Read on.
6. Payer and specialty influence on volume
When looking at case volume changes year over year, two areas to look closely at are the payers and specialties involved. If your data reveals you performed significantly fewer pain management cases for Medicare patients but performed more large orthopedic cases, a drop in overall case volume might be acceptable. You may have a more positive outcome with your cash since those orthopedic cases likely paid well, especially in comparison to the Medicare pain cases.
Which brings us to the importance of reviewing your…
Changes in payments are typically going to be in line with how you ended up year over year with your case volume. If your case volume decreased, you are likely going to see a decrease in your payments and overall cash for that year. However, depending on the case mix, as we just discussed, your case volume could decline while payments increased.
What matters here is determining how your payments changed, what caused the change, and what you need to do to make sure payments trend in the right direction. That could be anything from adjusting certain case types, to recruiting more providers, to addressing business office shortcomings, to partnering with an ASC billing company.
8. Accounts receivable
As part of your payments review, make sure you haven't experienced an increase in accounts receivable (AR). When looking at your AR, review key performance indicators such as "days in AR" and "AR > 90." If those metrics increased but your payments are down and your case volume is consistent, then you are likely looking at issues concerning the work on your AR. Is that due to a lack of resources? A lack of aggressiveness? Did you hire new staff who aren't fully trained? Is their productivity low? Examine your revenue cycle management processes and the individuals tasked with those responsibilities.
9. Payer issues
As you review your 2022 performance, identify any payer issues you experienced that have not yet been resolved. Did you add a new procedure and are now experiencing denials you weren't experiencing before? Are payers not paying according to their contracts? Are you seeing more medical necessity issues or payers requesting medical records that weren't previously requesting them?
Another important issue to check is how your ASC was affected by authorizations. If you noticed an uptick over the last year of authorizations impacting your cash and AR, that would be in line with what's been transpiring in the industry. In 2022, many payers greatly changed how they approached penalties if a case was determined to be unauthorized. In the past, if a case wasn't authorized, we could appeal it and explain why the case was unauthorized. A typical reason cited was a change in CPT code, such as a simple arthroscopy changing from CPT 29880 to CPT 29881. We would typically be successful with that appeal and receive full payment. Now we're seeing a growing number of payers applying a penalty — sometimes a significant penalty that eats up a large portion of the reimbursement — if you do not authorize the correct code.
Other big authorizations issues that took off in 2022 are providers "failing" to update payers that require the addition of a final code to the authorization or obtain a retro authorization by the payer's deadline. If that update of the authorization with the final code, including implants, is not performed within the payer's statute, you could be facing a large penalty or a denial that cannot be overturned. Determine whether your ASC is being affected by these changing authorization rules and what rules you must follow going forward to best avoid these obstacles to payment.
Learning From 2022 To Achieve a Great 2023
The areas and actions covered in this piece should provide you with information that can help you identify weaknesses, strengths, problems, and opportunities for improvement. Taking the time to closely review your ASC's 2022 performance and then building a plan to aggressively act upon what you learn will be critical if you hope to improve upon last year.
If you're looking for more tips and best practices on how you can grow your ASC and set it up for success in 2023, consider downloading our recent e-book.