Home » Blog Articles » Insurance Providers » UnitedHealthcare is Limiting Payments for Outpatient Surgery in Hospitals

United Healthcare (UHC) is implementing a new policy that would help to push outpatient surgical procedures to non-hospital sites like ambulatory centers. UHC argues that this move is necessary in order to control cost, yet hospitals likely disagree.

Where care is delivered:

In recent years, UHC has grown in size and experienced a few lawsuits. However, the health insurer’s push to reduce outpatient surgical costs is likely being watched by other insurance providers.

The fact that UnitedHealthcare has implemented prior authorization policies that encourage outpatient surgeries to occur in a lower-cost location is not a new concept. The use of prior authorizations in healthcare has occurred for some time. Health insurance providers argue that certain medical procedures are sometimes more expensive in hospital settings.

In 2017, Anthem announced that they will not cover the cost of patients receiving MRI or CT scans from a hospital-owned outpatient facility. Instead, these scans are required to take place at an independent imaging facility. Similar to UHC, Anthem stated that this policy is done in order to provide quality health care services while reducing medical expenses.

UHC has stated that they will not reimburse for certain scheduled outpatient surgeries that are conducted in a hospital setting, unless the surgical site is verified as medically necessary. In order to accomplish this task, the health insurer will expand their use of prior authorization requirements and site of service medical necessity reviews for specific surgeries.

UnitedHealthcare states that the site of service medical necessity review is a vital part of controlling medical costs. UHC states that they are focused on working to “minimize out-of-pocket costs for our plan members” while simultaneously improving cost efficiencies as they provide quality health care. This outpatient surgery policy will likely reduce the situations where UHC pays for specific surgeries in an outpatient hospital setting.

However, there are some safety measures built into the UHC’s new policies. If patients have serious health conditions like coronary artery or liver disease, then having their surgical procedure in a hospital outpatient setting is medically necessary. In addition, if patients live in an area where they do not have access to an ambulatory surgical center, then the procedure can take place in a hospital outpatient setting.

Part of a Larger Debate:

There is a larger debate in the United States over how to provide the best quality of healthcare while controlling costs. Some in the healthcare industry advocate that hospitals charge higher fees than other facilities for the same procedure or treatment.

The Centers for Medicare & Medicaid Services (CMS) have their own prior authorization initiatives. For example, the CMS has created a prior authorization process and requirements for some hospital outpatient department (OPD) services. The large insurance provider states that this initiative will serve as a method to control the growth of unnecessary medical services.

Using wording that sounds similar to UnitedHealthcare’s language, the CMS stated that they believe that “prior authorization for certain hospital OPD services will ensure that Medicare beneficiaries continue to receive medically necessary care – while protecting the Medicare Trust Fund from improper payments and, at the same time, keeping the medical necessity documentation requirements unchanged for providers.”

There is a legal fight over the concept of site-neutral pay policy. In recent years, the American Hospital Association and the Association of American Medical Colleges have sued CMS multiple times over the usage of site-neutral payment methods. Both of the above groups won their lawsuit in 2019 and have a similar lawsuit moving through the courts in 2020.

Some research supports the claim that hospital settings are more expensive, but do not provide better healthcare outcomes. For example, a study in the Journal of Health Economics looked at colonoscopy prices for the California Public Employees’ Retirement System. The site locations for the procedure were either hospitals or ambulatory surgery centers (ASC). The study concluded that ASCs offered services at a cheaper price, while having no negative impact on a patient’s health care.

There is a concern that these non-hospital surgical locations have less regulatory oversight. Other concerns arise from the fact that even though UHC has built-in safety measures for more dangerous pre-existing conditions; if there are surgical complications these sites are less equipped to handle them.

Other healthcare industry groups see the excessive use of prior authorizations as an unnecessary administrative burden. There is an argument that medical service decisions should originate from the judgment of patients and physicians. Groups like the MGMA have argued that the prior authorization process for physicians and other clinicians is already too long and complex. They argue that the process needs to be streamlined and reformed.

It is clear that the American health care industry is slowly transitioning to a value-based or value-added model. However, the term “value” may mean something different for a doctor, a patient or a healthcare plan administrator. Hospitals, ambulatory surgical centers and other outpatient facilities will likely face additional competition from companies that traditionally did not directly participate in the delivery of healthcare services. This new competition will arise from companies like Walmart and the various tech companies that have entered the healthcare marketplace.

About the Author:

For questions about this article or other revenue cycle management topics – contact us. Advanced Billing & Consulting Services (ABCS RCM) has been providing medical billing and other supportive services since 1997. For more information about their services contact them at 614.890.9822.

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