Ambulatory Surgery Center Payer Contract Negotiation Guide · 2019-11-08 · Ambulatory Surgery...

Ambulatory Surgery Center

Payer Contract Negotiation GuideGuidance on the Fundamentals and Critical Factors for Effective and Successful Negotiation of Contracts

A Step-by-Step Approach for Ambulatory Surgery Centers

Contents

The Value of EXPAREL: Individualized Reimbursement Without Contract Limitations for Other Medications or Devices

What Information Does an ASC Need to Be Successful in Negotiation and to Build a Business Case?

Questions and Answers That Impact the ASC’s Success With Payer Contract Negotiations

Negotiation Objectives

Payer Benefit Designs and Implications for Strategy

Important Safety Information (ISI) and Appendix

1

12

25

18

26

27

Overview Information for Success

Q&A Objectives Benefit Design ISI and Appendix 1

Introduction to Optimizing Success With Payers and Capturing Reimbursement to Cover the Cost of EXPAREL

Ambulatory Surgery Center (ASC) payment methodologies vary across the United States by payer. Access to reimbursement for a drug or supplies or implants to be paid for separately in the ASC is often limited or not included in a standard ASC contract.

This guide provides ASC administrators and managed care leaders with the fundamentals and critical factors that impact success in contract negotiations and access to reasonable and adequate reimbursement. The guide offers a step-by-step approach for effectively partnering with payers and tips to help avoid pitfalls.

This reimbursement guide provides a review of the most common payment methodologies and the data needed to develop and build an effective business case that demonstrates the value of your ASC to the payer, which is critical to optimizing success in negotiating reasonable and adequate reimbursement for surgery. While the guide emphasizes the approach and tactics to employ to achieve success with payers in covering the cost of EXPAREL, these fundamental principles can be applied to other items that may not be covered based upon the contract payment methodology and/or rate structure, such as implants and high-cost disposable supplies.



Effective January 1, 2019, CMS established separate reimbursement to ASCs for EXPAREL. Under the new rules, when billing, use HCPCS code C9290, which is assigned to EXPAREL and was given a payment status of “allowed” when used in a surgical procedure on a Medicare patient in a Medicare-certified ASC.

EXPAREL is priced at $1.22/mg and should be billed using HCPCS code C9290. The amount must be expressed as 266 mg or 133 mg.

Note: The allowed amount for reimbursement is based on the full dose being used for the surgical procedure.

• Acute care hospitals, Hospital Outpatient Departments (HOPDs), and hospital-based same-day surgery centers are not included in the rule; therefore, they will not be reimbursed separately for EXPAREL

As payers and employer groups are embarking on national initiatives to reduce the use of opioids for pain control, providing payers with education and evidence that EXPAREL is a proven, long-lasting, non-opioid alternative for postsurgical pain management should be an important part of the discussion.

* It’s important to note that CMS updates drug pricing quarterly, and the payment status indicator is reviewed annually and can be revised throughout the year.

• For the 266 mg (20 mL) dose, the allowed amount for reimbursement* is $324.52

• For the 133 mg (10 mL) dose, the allowed amount for reimbursement* is $162.26

Please see Important Safety Information on page 27, as well as accompanying full Prescribing Information. Full Prescribing Information is also available at www.EXPAREL.com.

https://www.exparel.com



Where Do I Begin?

Do your homework

Conduct an inventory of your existing contracts and identify the following key terms that are critical to evaluating payer contracts.

• Payment terms

• Reimbursement methodology

• Multiple procedure logic

• Provisions and evidence of language addressing reimbursement of prosthetics, implants, devices, drugs, and biologics and other high-cost items

Evaluate existing contracts, understand the methodology, and identify options for accessing reimbursement that will cover the cost of EXPAREL and other high-cost items, such as implants and supplies.

Identify contracts that are based upon the current ASC Medicare reimbursement methodology and that follow Medicare policy versus those that may follow other methodologies.

Payers that follow Medicare policy may adopt new codes and pricing for new codes but may not use the Medicare payment methodology for the basis of payment.

• Contract effective date and renewal date

• Termination provisions and anniversary clauses

• Payer-specific ASC list of approved CPT and HCPCS codes applicable to the contract



Why Is It Important to Understand Payer Contract Terms and Methodologies?ASC payment methodologies vary by payer and across the United States. Typically, drugs and biologics are included in the ASC fee in the payer’s contract, which means they are considered “packaged” into the price charged for surgery and into the reimbursement for surgery. Implants and high-cost supplies are often included in the packaged price as well; however, some payers reimburse for these separately.

It is important to understand the payment methodology of the ASC contract, query the payer, and seek confirmation from the payer to determine what payment methodologies—such as alternative payment methodologies (APMs)—are available. APMs may present a feasible solution if an ASC contract’s existing methodology is prohibitive.

When EXPAREL is used in a surgery case, the steps below should be documented in the operative notes. In addition, EXPAREL should be billed with HCPCS code C9290.

Bill for EXPAREL

whenever it is used

regardless of the allowed

amount in the contract,

unless there are contractual

or regulatory limitations that

prevent the ASC from billing.

Review the payer contract to ensure there

are no restrictions in the

contract that prohibit the

billing of drugs.

Check your state rules to determine

if there are any risks associated with

billing for a noncovered service. If

there are contractual restrictions, then

C9290 should not be billed. If there

are state rules that present limitations,

then the ASC should refrain from

billing C9290.

If the payer does not pay for EXPAREL and the ASC does not

bill for it, the payer will not have

record that EXPAREL was used in

the case, which can limit the ASC’s

success attaining approval and

negotiating a rate for EXPAREL.

It is important for the ASC to bring this to the attention of the payer as soon

as possible so that the payer knows that

nonpayment is an issue at the ASC.

Notify the payer as soon as the ASC starts using

EXPAREL, as billing for it enables the payer to identify

the types of cases that are being performed with

EXPAREL. This in turn will allow the payer to recognize

if coverage is an issue and will support a more

successful negotiation.

This information should always be documented in the

operative report.



If the payer will recognize and price the C code to be included in the ASC contract, opportunities for negotiating the rate may be possible.

When the payer considers EXPAREL to be packaged, negotiation entails factoring the cost into the packaged ASC reimbursement rate, which includes EXPAREL.

The ASC reimbursement rate should be calculated at the case level, factoring in any reimbursement provisions for applicable procedures that may be performed as part of the case. Implants and high-cost supplies should also be included, when applicable.

It is critical that the ASC has a comprehensive understanding of its existing contract payment methodologies and terms.

There are key definitions and terms that are important to successful payer contract negotiations. Below are some of the most common payment methodologies, terms, and definitions that will be important to effective contract negotiations with payers. Commentary is provided pertaining to the general structure of the payment method and the application of the methodology to EXPAREL, drugs, and biologics. Additional general terms that may be applicable to contract negotiations and contract language can be found in the Appendix.

Medicare APC Yes, if code is on the approved CMS list

Automatic Yes

Percentage of Medicare Yes, if code is on the approved CMS list

Depends on contract language (fixed year or "current")

Yes, if the contract is based on Medicare

Medicare Grouper No No No

Outpatient Grouper (eg, Ambulatory Payment Groupers [APGs] or Enhanced Grouper)

Varies by payerSubject to payer review and update

Possible

Fixed-Fee Schedule Varies by payerSubject to payer review and update

Possible

Carve-Out If negotiated Subject to renegotiation Possible

Case Rate No No No

Bundled Payment for an Episode of Care No No No

Non-Grouped Provisions and Methods Varies by payerPossible, subject to payer review and update

Possible

Common ASC Reimbursement Methodologies and TerminologyFigure 1 below provides an overview of common ASC payment methodologies and terms, along with terms for reimbursement of EXPAREL by methodology.

ASC Payment Methodologies and Reimbursement Terms

Drugs Reimbursed Separately (current)

Access to EXPAREL With Rule Change

EXPAREL Reimbursed Separately

Figure 1: ASC Reimbursement Methods and Terms Overview



The following provides an overview and descriptions of reimbursement methodologies typically seen in ASC contracts, as well as several APM options.

OPPS (Current ASC and HOPD Medicare Payment Method)

The Hospital Outpatient Prospective Payment System (OPPS) is the current payment methodology put in place by Medicare for ASCs and HOPDs. The Ambulatory Payment Classification system was established by Medicare as part of OPPS, originally to compensate hospitals for outpatient services and was recently implemented in ASCs to establish a uniform payment methodology for outpatient surgery regardless of location of service.

Implants are included in the payment weight and rate for surgery. CPT codes are classified as device intensive when the implant cost exceeds 30% or more of the total cost of care in the HOPD setting, as provided in cost reporting data collected from hospitals. There are some drugs and biologics that can be reimbursed separately under OPPS.

Percentage of Medicare

ASC Medicare rates are multiplied by a percentage and are based upon the Medicare-approved CPT codes and allowed amounts under the OPPS. When this methodology is used, the percentage and year of the methodology should be clearly defined, along with geographic-area adjustments. Drugs and biologics are allowed and priced based on the codes Medicare has approved and priced. EXPAREL was added to the Medicare list for ASC reimbursement effective January 1, 2019.



Medicare Grouper

The historical CMS prospective payment system for ASCs is based upon Medicare-approved, ASC-eligible CPT codes. CPT codes are organized and mapped initially into 9 payment groupers, with an additional 56 grouper mappings added in 2007 to control for payment rates in ASC settings falling into higher payment categories than HOPD rates. Reimbursement is negotiated by grouper and subject to geographic-area adjustments. Drug and biologic codes are not included in the Medicare grouper methodology; therefore, there are no allowed amounts for reimbursement of EXPAREL in this payment system.

Outpatient Grouper (eg, APGs or Enhanced Grouper)

Payers may use Medicare groupers as a foundation and modify mappings and/or add new groupers to expand the list of CPT codes that are allowed in an ASC in order to enable more services to be paid in outpatient surgical settings. Reimbursement is negotiated by grouper and subject to change by payer. A payer may include codes associated with drugs and biologics and may present with an opportunity to add EXPAREL to the list of codes it allows for reimbursement.

Fixed-Fee Schedule

Proprietary fee schedules developed by commercial payers establish a unique charge for a CPT code. Fee schedules can be based on percentage of Medicare or outpatient groupers and may include carve-outs. Under a fixed-fee schedule, drugs and biologics may be priced separately and not grouped or bundled in the CPT code fixed-fee schedule. This presents an opportunity to capture reimbursement for EXPAREL.

Carve-Out*

Surgical procedures, drugs, biologics, implants, and high-cost supply items may be “carvedout” of a payer’s payment methodology and paid at negotiated rates. Carve-outs are typicallyused for high-cost services and any CPT codes corresponding to surgical procedures areineligible for payment using the payer’s standard payment methodology. Carve-outs may beused to address noncovered services such as disposables, drugs, biologics, andimplants. Surgical procedures and high-cost supply items that are carved out in a contract will typically be identifiable in the contract in a "carve-out" list that includes the corresponding CPT codes and/or applicable HCPCS codes.

EXPAREL may be carved out of the payment methodology if negotiated and agreed to by the payer. In addition, the surgical CPT codes associated with the utilization of EXPAREL may be negotiated as carve-outs if agreed to by the payer.

* Carve-outs may also be CPT codes that are removed from the payer’s standard payment methodology and priced at an alternative reimbursement rate not subject to the methodology of the contract.



Case Rate

Reimbursement is based upon a negotiated “case rate” for surgery, which is a global rate of reimbursement for the facility component of services provided in an ASC. Case rates may include payment for surgeons, facilities, anesthesiologists, pre-op testing, implants, biologics, and devices used for a surgical procedure performed in the ASC. Payers are interested in packaged prices or case rates that cover all services provided in the surgical episode of care in the ASC.

EXPAREL would be included in the case rate reimbursement under this methodology and would not be paid for separately.

Bundled Payment for an Episode of Care

A bundled payment is a negotiated dollar amount or fixed rate of reimbursement paid to manage an episode of care. An episode of care may be a surgery, defined illness, or health condition, or it may be based upon a time period for the provision of services (eg, all services provided in a 30-day period). Bundled payments are typically referred to as “case rates” for the ASC episode of care, which most commonly includes all services associated with the surgery performed in the ASC on the date of service. Under this methodology, payment includes one rate for surgeons, anesthesiologists, and the ASC. In the event that the case rate includes all services provided for a period of time, such as 30 days pre-op and 30 days post-op, the nomenclature is typically a “bundled payment.”

EXPAREL would be included in the bundled payment under this methodology and would not be paid for separately.

Non-Grouped Provisions and Methods

In any methodology that utilizes a grouper- or mapping-based payment methodology, such as the ASC Medicare groupers, proprietary payer-defined groupers, OPPS, or APGs, there may be a “non-grouped” provision included in the terms of the contract. Under the non-grouped provision, the payer may include a payment amount, which could be in the form of a flat rate and/or a percentage of billed charge, that covers any CPT and HCPCS codes that are not included in the payment methodology. When a non-grouped provision is included in the contract, and if the language specifies that the provision includes any or all other codes that are not grouped, it may present an opportunity to incorporate reimbursement for EXPAREL.



Payer Contract Negotiation | Preparing Before Negotiating

Determine if the contract reimbursement is based upon the 2019 Medicare methodology

• If the payer follows the 2019 Medicare methodology, then EXPAREL will be reimbursed in an ASC as long as the payer has made updates reflecting the Medicare-approved ASC list as of January 1, 2019

• Some payers follow a specific or prior Medicare year versus 2019, so EXPAREL may not be reimbursed if they are on a year when EXPAREL was not covered for separate payment

• If the payer follows Medicare, then implants will be included, so it is also important to look for cases with high-cost implants or other supply items

• Contact payers, and/or review provider portals, that follow Medicare, and confirm the timeline for the payer updates to the 2019 rates and for each year thereafter

• Payers that do not follow the Medicare methodology or policy and may not cover EXPAREL should be contacted to determine if they are willing to add HCPCS C9290 to their approved list and/or carve it out for separate payment; these same payers may provide for separate reimbursement for implants and devices

• Payers that use a proprietary payment methodology may follow Medicare policy and add HCPCS C9290 and price EXPAREL and allow it for reimbursement using the payer’s methodology. Therefore, it is important to ask the payer if they have updated their code list or fee schedule and to request a copy with pricing in the event that EXPAREL has been added

• Determine if there are payment provisions for implants and other high-cost supply items

Verify contract coverage for drugs and specifically for EXPAREL code C9290

• Review your ASC contract to determine if there are any payment terms that allow for reimbursement of pharmaceuticals

• Evaluate the contract fee schedule, and determine if there are any payment provisions that will specifically allow for reimbursement of EXPAREL, under HCPCS code C9290. If you have coverage, determine the payment rates, methodology, and adequacy of reimbursement to cover the cost



Determine if the contract has a provision for EXPAREL reimbursement

• EXPAREL is reimbursed

– If the payment rate is adequate to cover the cost, there is no need to negotiate the rate. Ensure that your business office is aware that EXPAREL is covered and that it should be billed in milligrams using HCPCS code C9290

– If you have coverage but the payment rate is not adequate to cover the cost, this will require negotiation with the payer

• EXPAREL is not reimbursed

– The contract will likely require negotiation. However, contact your provider network representative at the payer to confirm if coverage is not clear, and inquire about the reimbursement method and rate for EXPAREL

Identify the surgeries that will require EXPAREL, implants, or other extraordinary high-cost supplies

• Review the CPT codes associated with the surgeries that will utilize EXPAREL, implants, and other high-cost supplies and assess the total current contracted payment

• If these are new surgeries that have never been performed at the ASC, and you are unable to identify a payment rate in the contract terms and fee schedule, verify with the payer that the CPT code is allowed in the ASC

– If the CPT code is not on the payer’s ASC allowed list, the payer will typically not negotiate a rate for the surgery without internal payer approval to add the code for reimbursement in the ASC setting

– If the CPT code is allowed, review the contract terms and payment rates, and calculate the total allowed amount that accounts for any reimbursement logic associated with multiple procedures as well as implants

– If the reimbursement is adequate and covers the cost of EXPAREL or implants and other high-cost supplies (total cost) at the case level, negotiation may not be needed

– If the reimbursement is found to be inadequate, the contract rates for the surgery codes will require negotiation to include the cost of EXPAREL

Preparing Before Negotiating (cont'd)



Additional guidance, including information needed to develop a business case, how to present the business case to the payer, and how to use the business case in contract negotiations, is provided in the following sections.

1

Initiate Payer Contact Collect DataPrepare Data to

Present Savings and Value of ASC to Payer

Develop Rate Targets and Strategy for the

NegotiationConduct Negotiations

• Contact the payer network representative

• Set up the initial payer meeting

• Collect the following data: – Surgeon names – Case volumes – Hospitals that cases will

move from – Hospital payer

explanation of benefits (EOB) (see the Appendix for more information)

• Gather case volumes that can move to the ASC

• Collect patient satisfaction survey data

• Obtain hospital reimbursement data for cases that are targeted to move from the hospital (cost to payer)

• Present the dollar value opportunity for annual savings

• Identity other payers that are covering the costs of the surgery, including implants, drugs, and medical supplies

• Develop a rate that demonstrates savings to the payer (20% to 30% is meaningful to the payer)

• Present the data• Do not propose rates that

are below your cost, with consideration of capital

• Prepare a proposal document, including methodology and rates

• Be prepared for 3 to 4 rounds of negotiations before reaching an agreement with commercial payers

• The larger the payer, and the more value the contract represents, the longer it will take to complete a negotiation

2 3 4 5

Initiating the NegotiationAsk the provider network representative for the email and contact information of the contract manager and/or VP of network development who is responsible for your contract. Submit a request to renegotiate the contract via email to the contract manager or VP of network development. If there are questions pertaining to the medical policy or for approval of CPT and HCPCS codes in the ASC setting, it may be necessary to meet with the payer’s medical director.

Figure 2 below offers an overview of the five steps and a summary of the objectives of the negotiation process. The steps below are pertinent to success.

Figure 2: Key Steps to ASC Contract Negotiations


Q&A Objectives Benefit Design 12ISI and Appendix

What Information Does an ASC Need to Be Successful in Negotiation and to Build a Business Case?

When the ASC contract requires negotiation to cover the cost associated with utilization of EXPAREL, implants, or other extraordinary high-cost supplies, preparing for an effective contract negotiation requires data collection that will help with the development of a business case. The objective of developing a business case is to demonstrate to the payer the value of the ASC and the utilization of EXPAREL in a case. The business case provides the payer with the information necessary to justify rates that may be needed to cover the cost of surgery that includes the cost of EXPAREL. The quality of data used to build the business case is important, as it will demonstrate the opportunity and value to the payer. The payer will not do the work for the ASC; therefore, it is critical that the ASC collects the data and prepares the proof to be presented to the payer.



The following data should be collected for any surgeries in which EXPAREL is used and that have the potential to migrate from the hospital to the ASC:

The new CMS rule for 2019, which includes reimbursement for EXPAREL to ASCs for Medicare patients. Commercial payers may not be aware of the updated reimbursement for Medicare, and you can provide the rule to help educate the payer. This will support the discussion to expand the reimbursement for EXPAREL

Information that provides a review of EXPAREL and serves as educational literature to the payer (eg, regarding the positive implications of using a non-opioid drug in surgery) that can be shared with medical directors and employer groups

A roster that includes the names of the ASC physicians who currently use EXPAREL

and/or plan to use EXPAREL to support moving surgical cases from the hospital to the ASC

The names and locations of hospitals from which the surgeons

will move the cases

Estimated hospital case volume by CPT

code that may be eligible to move to the

ASC and will utilize EXPAREL

Outcomes data and experience data

with other payers, if available, demonstrating

the effectiveness of moving case types out of the hospital setting

Patient satisfaction survey results from patients who received

EXPAREL

Information and literature that supports

your discussion with the payer, such as the

following:

Published studies of utilization of EXPAREL in surgery in the outpatient setting are typically advantageous to present to the payer, especially if the study indicates a favorable outcome or finding

1

2

3

4

5

6



Once the data have been collected, they must be synthesized to develop a business case emphasizing the opportunity the ASC offers to the payer.

Optimizing the value proposition can be accomplished by showing the total estimated savings to the payer that result from migration of surgery. The estimated savings may be measured as the variance between the payer’s cost for surgery performed in the hospital compared to surgery performed in the ASC, which includes the cost of EXPAREL (see Figure 3).

Figure 3: Savings to Payer (Hypothetical Example)

*Volume per year is payer-specific volume.

Hospital Cost per Case

$40,000

ASC Cost per Case

$20,000

Savings per Case

$20,000

Volume per Year*

50

Total Knee Arthroplasty

Business Case Checklist

Demonstrate value to the patient

Validate EXPAREL cost

Quantify total projected savings to the payer

Annual Savings

$1,000,000



The image below represents the Pacira Payer Savings Tool. It can be used to demonstrate savings to the payer.

Quantifying the value

is the most challenging task—and the most

important.

This Payer Savings Tool often requires access to hospital reimbursement data, which may be obtained by surgeons asking patients who have had the surgery in the hospital and gaining access to the hospital EOB (see the Appendix for additional information). Note that accessing the information from the patient is subject to the patient being voluntarily willing to share it.

If hospital reimbursement data are not available, HOPD Medicare reimbursement may provide validation and support of assumptions to the business case. For example, if the HOPD Medicare rate or a percentage of the HOPD Medicare rate is reasonable or adequate for the surgery, then the ASC can demonstrate that it is more cost effective than HOPD Medicare and it is safe to assume the ASC represents a savings as compared to the hospital.

The following link provides the HOPD Medicare rates, as of January 2019:

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html

The following link provides a comparison of Medicare HOPD to ASC reimbursement rates for procedure codes:

https://www.medicare.gov/procedure-price-lookup/

If the case is already being done in the ASC, such as a rotator cuff repair, and your surgeon desires or the patient requests to use EXPAREL in the case, review the history of volume by payer. Educate the payer that EXPAREL is now indicated for single-dose infiltration in adults to produce postsurgical local analgesia and as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia.

If the ASC has Medicare case examples available for 2019, it will be helpful to show the payer that Medicare is now reimbursing for EXPAREL, which has increased the Medicare reimbursement for many surgical cases. Provide an example of a case under the Medicare methodology with a comparison to the commercial payer’s methodology to demonstrate the implications of the new Medicare rule and how it compares to the commercial payer’s methodology and overall reimbursement.

1 Identify the volume of cases of each surgeon, by payer, that can move volume or additional volume that can move, with access to EXPAREL at your ASC.

2 Confirm or estimate the cost to the payer in the hospital for the case.

3Use Medicare comparisons when it can help you make your case.

SCAN THIS QR CODE with your mobile device to view this reimbursement tool

CLICK HERE to view this tool

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html

https://www.medicare.gov/procedure-price-lookup/



Medicare Implications on Commercial Payers Using Medicare

Consider the following example:

The commercial payer contract payment rates are at 125% of 2018 ASC Medicare rates. However, multiple procedures are paid at 100/50/25, and implants are included. As indicated in the tables below, the total reimbursement is actually 120% of Medicare based upon 2018 Medicare rates and 93% of Medicare based upon 2019 rates due to the changes in reimbursement and methodology attributed to the ACL rate increase and coverage for EXPAREL.

CPTCPT

DescriptionPayment Indicator

CPT Rate

Subject to Mcare

ASC MultPx Adj

MultPx Adj ProjNR

Payment Indicator

CPT Rate

Subject to Mcare

ASC MultPx Adj

MultPx Adj ProjNR % Change

29888 Knee arthroscopy/surgery

A2 $2,721 Y 100% $2,721 JB $3,697 Y 100% $3,697 35%


A2 $1,280 Y 50% $640 A2 $1,257 Y 50% $628 -0.02%

Implant - 0 n/a

EXPAREL - $324 n/a

Case Total $3,361 $4,649 38.3%

CPTCPT

DescriptionPayment Indicator

CPT Rate

Subject to Mcare

ASC MultPx Adj

MultPx Adj ProjNR

Payment Indicator

CPT Rate

Subject to Mcare

ASC MultPx Adj

MultPx Adj ProjNR % Change


A2 $2,721 Y 125% $3,402 JB $3,697 Y 125% $3,402 0%


A2 $1,280 Y 50% $640 A2 $1,257 Y 50% $628 -0.02%

Implant - - n/a

EXPAREL - $324 n/a

Case Total $4,042 $4,354 7.7%

Percentage of Medicare 120% 94%

Medicare Reimbursement Center

Commercial Payer Reimbursement Center

In the example of an ACL repair, as a result of the device-intensive status change, the Medicare ACL rate increased by 35%, without consideration of the additional reimbursement for EXPAREL.

As indicated in this example, updates to the Medicare methodology may present ample opportunity to demonstrate the inadequacy of the payer’s contract rate and can help the ASC justify the request for an increase in reimbursement and/or modification to the payment methodology that will improve the contract’s overall value.

2018 Medicare Area-Adjusted ASC Rates






ACHIEVING SUCCESS

Carve out EXPAREL utilizing the C9290 code for pricing and billing.

Carve out the surgical CPT code, price it, and provide supporting documentation

to the payer to build the business case.

Ask the payer if you can include a "non-grouped provision,"

which permits reimbursement of CPT codes that do not map to a grouper that allows for

reimbursement.

Educate the payer that EXPAREL is a proven, long-lasting, non-opioid alternative for postsurgical pain management.

If the contract negotiator is not responsive, request that a medical director from the payer be present at your next meeting, and bring a physician champion with you to the meeting. It is advantageous to invite the medical director to tour the ASC and meet with physicians, if the director is amenable and can readily visit the site.

Payers and employers have an interest in reducing the use of opioids in pain management.

If a payer does not follow Medicare and has not established reimbursement based upon the 2019 ASC Medicare rule changes, once you have succeeded with the business case, Figure 4 shows three approaches to achieving success with the payer to cover the cost of EXPAREL.

Figure 4: Approaches to Covering the Cost of EXPAREL

1

2 3



QA Questions and Answers That Impact the ASC’s

Success With Payer Contract Negotiations

Why would a payer be willing to cover the cost of EXPAREL in the ASC?

How does the payment methodology impact the strategy for negotiation and rate structure?

1 4

How motivated is the payer to support migration to an outpatient setting?

Does the payer have flexibility with the payment system?2 5

What obstacles might be encountered during a conversation about migration of surgery?

What obstacles can you expect when negotiating reimbursement methodologies with payers?

3 6

Scan this QR code with your mobile device to see what EXPAREL resources are available for your use.

Review these questions and related discussions on the following pages to ensure that you have a successful negotiating foundation. For more information, visit www.EXPAREL.com/reimbursement or call the reimbursement hotline at 855-793-9727



a) The payer follows the Medicare 2019 ASC payment methodology and/or payment policies that include separate reimbursement for EXPAREL.

b) Payers normally monitor Medicare reimbursement and policy updates. Now that CMS has included payment for EXPAREL effective January 1, 2019, it opens the door for discussion with payers to expand reimbursement for ASCs. CMS reimbursement supports the value and payment justification for EXPAREL.

c) If the ASC presents to the payer the opportunity to create value, which is translated into savings while maintaining quality in the delivery of surgical care, there will be a significant opportunity for the ASC to succeed in a contract negotiation with the payer.

d) Many payers have implemented national initiatives to reduce the use of opioids; these initiatives are critical to the overall health and well-being of the payers’ members. Employer groups are responsive to such initiatives, and this is one of the greatest discussion points an ASC can have with the payer. In addition to the clinical benefits to members, the opportunity to minimize exposure to opioids as a result of effective and long-lasting pain control is a critical component of the business case. It is important to reiterate that members are seeking health care providers that offer non-opioid options in the ASC.

Why would a payer be willing to cover the cost of EXPAREL in the ASC? Q

A

1 32 4 5 6



a) Payers are motivated when there is a meaningful opportunity for migration while maintaining quality that is measurable in outcomes data.

b) Quantifying the projected total value to the payer can result in some of the most effective information the ASC can offer the payer. If the ASC has access to the payer’s hospital cost (ie, the projected amount the payer reimburses the hospital), then the ASC will benefit from demonstrating the savings represented by the ASC’s proposed rate for the surgical cases plus the cost of EXPAREL. If the hospital reimbursement information is not known (it would have to be voluntarily shared by the patient and typically to the surgeon), then a review of HOPD reimbursement by Medicare may provide value to the negotiation. The following is a hypothetical example:

If the ASC is trying to negotiate reimbursement in the amount of $10,000 for a unicompartmental knee procedure, and the HOPD Medicare 2019 rate is $10,123, the ASC is offering less than the hospital Medicare rate. If the ASC has the opportunity to move these cases from the hospital, in most cases, it is safe to assume that the hospital is not being paid Medicare rates for a commercial patient with the payer. If the hospital were being reimbursed at 150% to 200% of Medicare reimbursement, the ASC potentially would be able to save the payer $5,000 to $10,000 per case. If there are 200 cases annually, or approximately 17 per month, that can move across all physicians, the total value might be in the range of $1,000,000 to $2,000,000 per year. These numbers are meaningful and should motivate the payer to work with the ASC.

How motivated is the payer to support migration to an outpatient setting? Q

A

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a) The payer may be concerned if moving the volume from the hospital to the ASC has a negative financial impact on the hospital and the hospital is needed in the payer’s network to provide a continuum of care to its members.

b) If the ASC has approached the payer with carve-outs, the payer may not have the CPT codes on its approved list for ASCs, which may require modifications to the payer’s medical policy.

Why are these concerns important, and how do they impact negotiations?

c) The payer may be concerned that if it enables migration of surgeries to the ASC that have meaningful value to the hospital, the hospital may seek nonstandard rate increases to offset the losses that result from the migration.

d) The payer may not have the CPT codes on its approved list for ASCs, which may require modifications to the payer’s medical policy. This often will require the medical director’s approval. The payer contracting executives cannot and will not negotiate for surgeries that are not approved for the ASC under medical policy. This will then require a significant effort by the ASC to work with the payer medical director to gain approval to provide the surgical service before the ASC can even begin to negotiate pricing. This adds another layer to the complexity of negotiation. Once the payer approves a CPT code, it is allowed in the ASC setting, and they will negotiate a rate to reimburse for the surgery, then the ASC will want to incorporate the cost of EXPAREL into the rate negotiation for the case.

What obstacles might be encountered during a conversation about migration of surgery?

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The payment methodology dictates the approach to negotiations. Understanding the payment methodology and determining the payer’s flexibility with respect to modifications can significantly impact the approach. If the payer can administer carve-outs, then most methodologies can be addressed either by carving out the surgical CPT code or by adding a provision to cover the code that will be used for EXPAREL, C9290.

How does the payment methodology impact the strategy for negotiation and rate structure?Q

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a) If yes, seek an APM that offers greater options for covering the cost of EXPAREL. Ask the payer if it can add a provision for drugs to be paid separately or if it is willing to carve out a CPT code at a greater rate structure that offers adequate and reasonable reimbursement. Carve-outs should be explored for covering the cost of EXPAREL whenever a payer confirms it can administer a contract that contains carve-outs.

b) If the payer is on a proprietary methodology and agrees to add EXPAREL to its methodology as a result of the Medicare rule change in 2019, make recommendations on the approach to modifying the methodology. For example, if it is a grouper methodology and there is a specific grouper rate that provides reasonable and appropriate reimbursement for EXPAREL, ask the payer to assign C9290 to the grouper value that covers the cost. It is also important to control for the risk of the highest-cost procedure when setting the rate, based upon the dosage. Always target rates that cover the most expensive scenario to mitigate risk for losses.

c) Be sure to review the multiple-procedure logic carefully, and if multiple-procedure reductions apply, this must be factored into the rate. For example, if the multiple-procedure logic specifies a 50% reduction in the rate, the ASC must double the rate to achieve the desired value.

d) If the payer uses a methodology that allows for reimbursement of drugs and biologics, review with the payer the option of reimbursing the cost of EXPAREL C9290. Following is sample language to request:

“EXPAREL will be reimbursed at invoice cost plus 10% or 20%” or “EXPAREL will be reimbursed at invoice cost.”

Cost plus 10% or 20% will offset shipping and taxes if the payer will only reimburse for the cost of the drug. Typically, this must be specified in the contract as follows: “The ASC will bill and be paid under C9290.”

e) If the payer is able to add a “non-grouped” or “all other” provision that includes the coverage of EXPAREL, the language to request is as follows:

“All ‘non-grouped’ or ‘all other’ CPT codes, including C9290, will be paid at 100% of billed charges.”

The percentage of billed charges requested typically equates to cost and/or cost plus a markup. The payer often will want to include language that states the ASC’s markup on cost and will then set the percentage equivalent to cost.

Alternatively, the payer may request a flat rate, in which case the ASC would negotiate a flat rate instead of the percentage of billed charges. Be mindful that if you have a “non-grouped” or “all other” provision and it includes surgical CPT codes, and you are negotiating a flat rate, the ASC must factor in all codes that are subject to the “non-grouped” or “all other” provision, which may include surgical codes in addition to EXPAREL.

Does the payer have flexibility with the payment system?Q

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If the ASC has been providing the surgical services without the use of EXPAREL in the past, the justification for the additional cost will be difficult to make without demonstrating the impact on outcomes. It will be critical to make the case that EXPAREL is a proven, long-lasting, non-opioid alternative for postsurgical pain management. The non-opioid platform supplemented by a body of clinical evidence across surgical procedures should be positively received by the payer, particularly when fully demonstrated in the business case.

Providing the surgical services without compensation for EXPAREL is necessary to demonstrate to the payer that the ASC is using EXPAREL. At the same time, if the ASC continues to provide services without negotiating to add EXPAREL for separate reimbursement and/or enhance the reimbursement rates of the cases using EXPAREL, it may negatively impact the success of the ASC to negotiate because it is effectively telling the payer that the ASC can do the case without additional reimbursement. Therefore, it is important for the ASC to address the reimbursement inadequacy in a timely manner.

What obstacles can you expect when negotiating reimbursement methodologies with payers? Q

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Information for Success

Overview Q&A Objectives Benefit Design 25ISI and Appendix

Best Practices

Provide the payer with the 2019 Medicare rule update and use this as the foundation for justifying reimbursement for EXPAREL.

Demonstrate the cost savings to the payer and patient by moving surgeries from the hospital setting to the lower-cost ASC setting. If the ASC reduces the cost to the payer, the patient out-of-pocket will also be reduced. Emphasize that EXPAREL is a non-opioid alternative expected to provide clinical and economic benefits that are beyond the acquisition cost for use in the ASC.

Prove value, and provide examples of how cases have effectively migrated from the hospital where the patient has had EXPAREL, assuming these data are available and the ASC has experience with other payers.

Validate appropriateness of reimbursement rates, and emphasize that the proposed reimbursement rate will allow the ASC to make EXPAREL available for these cases, and there is an increased opportunity to move the cases from the hospital to the ASC setting.

Present a business case by providing data that demonstrate value.

Negotiation Objectives

Discuss a rate or methodology change with the payer, after presenting the business cases, that justifies the additional cost and reimbursement rate proposed by the ASC. If the payer does not add a provision to the contract to cover the cost of EXPAREL, discuss an increase in the rate for the surgical CPT codes that are likely to utilize EXPAREL. If an effective business case has been provided, present the proposal with room to negotiate. Although it is desirable to receive an opening proposal from the payer, it may be difficult to secure one since the ASC is introducing the added cost and using it to justify the need for increased reimbursement rates.

Always define the rates and methodology.

Identify the greatest opportunities for payer alignment.

Partner with the payer and establish a positive relationship. The strength of the payer relationship can make or break the deal.

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Payers are creating product designs and incentives to support increased utilization of ASCs. Benefit designs targeted at changing consumer behavior are creating challenges for cash collections and accessing reimbursement. High-deductible plans place the patient at risk for higher out-of-pocket amounts

Payer benefit designs may focus on reducing member premiums by encouraging price sensitivity and limiting employee access to high-dollar, out-of-network providers

Effectively, the patient owes more money out of pocket; therefore, ASCs become a part of the solution when they can demonstrate cost savings with favorable outcomes due to their reduced cost structure

Payers and employer groups are encouraging benefit designs that reward consumer behavior for selecting lower-cost providers. For example, deductibles and copays may be waived to offer incentives to employees who access ASCs for surgical care

ASCs may be presented with an opportunity to approach large employer groups that will contract directly with ASCs at discounts in exchange for volume or exclusivity agreements for services

If the ASC is in the position to negotiate directly with the employer group, incorporate the cost of EXPAREL and the value proposition into your discussion and apply the principles outlined in the reimbursement guide to support these efforts

Payer Benefit Designs and Implications for Strategy

Overall, demonstrating that your ASC is part of the solution, and defining the ASC’s value, is the most effective discussion you can have with the payer. Your success will be highly contingent upon the quality of data you can present in your business case.



Indication

EXPAREL is indicated for single-dose infiltration in adults to produce postsurgical local analgesia and as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia. Safety and efficacy have not been established in other nerve blocks.

Important Safety Information

EXPAREL is contraindicated in obstetrical paracervical block anesthesia.

Adverse reactions reported with an incidence greater than or equal to 10% following EXPAREL administration via infiltration were nausea, constipation, and vomiting; adverse reactions reported with an incidence greater than or equal to 10% following EXPAREL administration via interscalene brachial plexus nerve block were nausea, pyrexia, and constipation.

If EXPAREL and other non-bupivacaine local anesthetics, including lidocaine, are administered at the same site, there may be an immediate release of bupivacaine from EXPAREL. Therefore, EXPAREL may be administered to the same site 20 minutes after injecting lidocaine.

EXPAREL is not recommended to be used in the following patient population: patients <18 years old and/or pregnant patients.

Because amide-type local anesthetics, such as bupivacaine, are metabolized by the liver, EXPAREL should be used cautiously in patients with hepatic disease.

Warnings and Precautions Specific to EXPAREL

Avoid additional use of local anesthetics within 96 hours following administration of EXPAREL.

EXPAREL is not recommended for the following types or routes of administration: epidural, intrathecal, regional nerve blocks other than interscalene brachial plexus nerve block, or intravascular or intra-articular use.

The potential sensory and/or motor loss with EXPAREL is temporary and varies in degree and duration depending on the site of injection and dosage administered and may last for up to 5 days, as seen in clinical trials.

Warnings and Precautions for Bupivacaine-Containing Products

Central Nervous System (CNS) Reactions: There have been reports of adverse neurologic reactions with the use of local anesthetics. These include persistent anesthesia and paresthesia. CNS reactions are characterized by excitation and/or depression.

Cardiovascular System Reactions: Toxic blood concentrations depress cardiac conductivity and excitability which may lead to dysrhythmias, sometimes leading to death.

Allergic Reactions: Allergic-type reactions (eg, anaphylaxis and angioedema) are rare and may occur as a result of hypersensitivity to the local anesthetic or to other formulation ingredients.

Chondrolysis: There have been reports of chondrolysis (mostly in the shoulder joint) following intra-articular infusion of local anesthetics, which is an unapproved use.

Methemoglobinemia: Cases of methemoglobinemia have been reported with local anesthetic use.

Full Prescribing Information is available at www.EXPAREL.com.



Allowed Amount Total amount to be paid for a service per the provider contract

Benefit Plan Specifically designed plan of health insurance benefits for individuals, families, and/or employers

Carve-OutsCPT codes that have been “carved out” of a payer’s payment methodology and paid at a negotiated rate. Typically for high-cost and/or high-volume services, CPT codes that are not eligible for payment using the payer’s standard payment methodology, or codes whose rates do not include high-cost supplies and drugs

Case All surgical procedures per patient on one date of service

Charge The actual amount that a provider charges for a particular service

Coinsurance The patient’s share of the total cost of the service (separate from deductible)

Collections/Receipts The actual amount a provider has collected for their services

Commercial Payer Nongovernment, private companies providing insurance, including exchanges

Copayment The amount the patient pays prior to payment from the insurer

CPT Code The five-digit code given to a procedure by the AMA

Explanation of Benefits A statement sent by the insurer to the patient explaining what payments were made for services on the patient’s behalf

Fee for Service Reimbursement on a per item basis (could be many items per patient encounter)

Government Payer Government-run health insurers (eg, Medicare, Medicaid, TRICARE)

Hospital Outpatient

DepartmentFacility connected or close to the hospital that it services

Multiple-Procedure Discount Payment methodology for primary, secondary, tertiary, and all subsequent procedures

Network A group of providers and facilities contracted to provide services for a payer’s membership

Payer The health insurance company or entity paying the claim (eg, insurer, managed care organization, carrier)

Payer Fee Schedule Payer-determined list of prices by CPT code

Percentage of Billed Charges Negotiated discount off a provider’s set charge master or fee schedule

Provider The person or facility that provides the health care service

Reimbursement The negotiated amount a payer is contractually obligated to pay a provider for a service

AppendixPayment Terms and Definitions

B I O S C I E N C E S , I N C . ©2019 Pacira BioSciences, Inc. Parsippany, NJ 07054 PP-EX-US-5071 07/19

Ambulatory Surgery Center Payer Contract Negotiation Guide · 2019-11-08 · Ambulatory Surgery...

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