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Alternative Payment Model Promises More Penalty Than Pay

by Thomas Collins • November 5, 2015

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The fee doesn’t cover medications, and the facility tells patients that if something unexpected were to happen, any fees incurred at other facilities, such as an emergency room, aren’t covered, although that situation hasn’t arisen yet.

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Explore This Issue
November 2015

Dr. Locandro noted that there has been a 34% drop in the uninsured since 2013, but 27 million Americans still have no health insurance. For those patients, the flat fee is an attractive option. Two-thirds of those who have chosen this option are uninsured.

The rest have high insurance deductibles and figure it would be cheaper to pay straight out of pocket than to go through an insurance company. Because patients are billed separately for a variety of services in traditional billing that is done through insurance, they can save thousands of dollars in some cases by choosing to pay the flat package fee, Dr. Locandro said.

He said the center is able to charge these fees because because they have full control over the facility. “We know our costs very clearly to run our center,” Dr. Locandro said. “We know our fixed overhead and the variable overhead with staff requirements. We know our equipment needs and costs.”

In 2014, the cash packages accounted for 6% of the center’s business. So far in 2015, they have accounted for 7%.

An uninsured woman from Nevada, who needed a tonsillectomy, recently chose the cash payment option. She said the cheapest tonsillectomy she could find near her home was $8,000. At Dr. Locandro’s center, it cost a fraction of that.

He said it takes a savvy customer to understand that it might be smarter financially to pay out of pocket, but the option hasn’t caught on. “That’s a change in mindset. How many people pay cash for medical services?” he asked.

The center has suggested to insurers that they could accept these amounts for the procedures, because it is almost certainly cheaper than having them performed in a hospital. “We’ve had that discussion,” he said. “I’d like to do that.” But Dr. Locandro said he’s found that insurers haven’t been “as flexible” as he’d like.

Physicians Wary of Episodes of Care

In northwest Arkansas, the Ear, Nose and Throat Center of the Ozarks and other practices have essentially been forced to participate in the Arkansas Health Care Payment Improvement Initiative, or they would not be eligible to be paid by the three major insurers, including Arkansas Blue Cross Blue Shield, which collaborated to create the payment system, said Lance Manning, MD, the president and managing partner of the center.

Pages: 1 2 3 4 | Single Page

Filed Under: Features Tagged With: AAO-HNS 2015, alternative payment model, APM, Medicare, Merit-Based Incentive Payment System, MIPS, reimbursement, SGR, sustainable growth rateIssue: November 2015

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  • When Dealing with Insurers, Electronic Payment Tools May be an Otolaryngologist’s Best Friend

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