Payer Redirection of Outpatient Care: What You Need to Know

By Moses Landon, Vice President of Patient Access Operations, and Sam Timpone, Director of Legal Revenue Recovery

Insurance payers have recently issued a number of policies aimed at redirecting patient care with the goal of steering patients to treatment outside of hospital settings. In their attempts to do so, payers are disregarding preexisting contracts with providers and complicating the patient experience and pre-authorization processes. These policies make it increasingly difficult for providers to deliver exceptional patient experiences without a negative impact on their bottom line.

Below is what healthcare organizations need to know about the latest policies and their impact to avoid reduction in payment, decrease in volumes, and confusion among patients.

Encouraging a Site-of-Service Shift

UnitedHealth Group (UHG) recently published an article aimed at plans, members, and their caregivers encouraging “non-complex commercially insured individuals” with employer coverage to seek treatment for common outpatient procedures in Ambulatory Surgery Centers (ASCs) versus a hospital setting. UHG claims that healthcare consumers have the potential to save an alleged average of $684 per outpatient procedure.[1] The article further indicates that employer plans making this site-of-service shift could reduce plan spending by 59%. 

Key Considerations for Providers

In coming to its findings, UHG performed an analysis of claims for members with employer coverage between March 2019 and February 2020. UHG, however, noted that the actual savings realized by members will vary based on their plan design.[2] The analysis failed to provide the following key elements:


    • Detail on the benefit structure for the plans surveyed

    • Breakdown of claim review by procedures

    • The geographic regions surveyed to determine the average procedure spending by plans or patients[3]

The analysis also did not consider the various contracted rates United Healthcare (UHC) holds health systems. These managed care contracts have varied reimbursement rates and plan types for procedures in an ASC versus a hospital outpatient center. In other words, cost savings are not always guaranteed due to contract variations.

Revenue Impact on Providers

UHG’s objective is clear – to redirect site of outpatient care from hospital to ASCs.

This most recent policy evidences a direct, organized effort to shift patient choice from sites of service deemed appropriate by providers to those chosen by payers. UHG considers routine outpatient procedures to be those performed on digestive system, musculoskeletal system, urinary system, nervous system, integumentary system, hemic and lymphatic system, cardiovascular system, respiratory system, endocrine system, nose, mouth, pharynx, eye, ear, and female and male genital organs.[4] Many of these very broad categories can include procedures which, by their very nature, lend concerns regarding complexity and appropriateness for site-of-care.

This follows a trend within the last year of similar policies issued by UHC that seek to focus on cost savings over patient choice and physician medical decision making.

UHC implemented a policy to limit outpatient surgery payments to hospitals, and expanded prior authorization requirements and site-of-service medical necessity reviews for certain surgeries in an effort to shift surgical procedures to locations perceived as less expensive. Under this policy, UHC will only pay for a surgical procedure performed in an outpatient hospital setting if the payer determines the site-of-service for the procedure is medically necessary. Per UHC the site-of-service medical necessity reviews would apply to more than 1,100 medical codes for a wide array of planned procedures from colonoscopies and knee replacements to eye surgeries, biopsies, removal of a tumor, or insertion of a pacemaker or heart catheter, will take place during the prior authorization process. This review process would lead to delays in patient care and uncertainty in patient scheduling.

Similar policies that focus on plan/payer cost savings over individual patient needs include those that apply to radiology services in which third-parties contracted with UHC contact patients to inform them of their ability to move their case out of the hospital. Other payers followed UHC in recent years by refusing to pay for some services, such as MRIs, when performed in hospitals.

Most recently, UHG’s 2020 Sustainability Report outlines their goal of delivering 55% of outpatient surgeries and radiology services at ASCs by 2030. This goal implies the possibility to lower patient financial responsibility (deductibles, co-insurance and copayment options) for the aforementioned outpatient procedures delivered at ASCs; however, actualization of saving will be determined based on plan type.

How Can Providers Protect Margins?

Leverage Your Revenue Cycle Management Partner to Drive Four Key Initiatives

“It is our responsibility to help providers navigate a massive headwind by insurance payers to redirect care without regard to the agreements they made with providers.”

This statement by Judson Ivy, Founder, President and CEO of Ensemble, affirms the importance of revenue cycle partners working directly with hospital executive leadership to optimize revenue cycle outcomes and improve patient experiences.

Like other payers, UHC’s policy implies it will result in a reduction of plan payment and spend obligations but fails to acknowledge the added, unnecessary administrative burden and increased cost to health systems.

Your revenue cycle partner can lessen this burden by driving four key initiatives.

1. Payer Trends:

Patient Access and Surgery Scheduling teams should monitor insurance payer activity with respect to attempts to redirect care, while maintaining the delivery of superior customer service. These teams can prioritize internal review of regional and national insurance policies, including health plan changes in benefits, eligibility and patient financial responsibility, which, in turn, effects site-of-service decisions. Pre-authorization activities must maximize a patient’s ability to choose a hospital setting whenever possible based on patient medical need, access, transportation, or after-care considerations.

2. Ease of Patient Navigation:

Collaborate with providers, clinicians, and operations to drive operational improvements by quality-driven review of procedure types and patient-centered processes. Develop data-driven scripting and education for communication to patients on quality outcomes so patients and caregivers can make informed decisions. Implement pre-service and time-of-service guidance for patients and caregivers by providing the following solutions:


    • Digital scheduling and pre-registration self-service solutions

    • SMS/email scheduling confirmations and appointment reminders

    • Patient appointment waitlisting and automated cancellation backfilling

    • Digital patient payments and real-time messaging/live chat

From a continuity of care perspective, patients and caregivers can also be offered these solutions as they select convenient hospital setting locations, and review benefits and eligibility options.

3. Physician Engagement:

According to Modern Healthcare, payers like Anthem typically attribute higher charges to higher cost, which is not necessarily accurate depending on a plan’s allowable and applicable contract terms and methodology. In an effort to lower healthcare spending, Anthem no longer pays for MRIs or CT scans delivered in a hospital outpatient setting. Revenue cycle leadership must engage with physicians to clearly lay out impact on patient responsibility and projected reimbursements based on contracts and historical volume. Health systems must also contemplate related volume changes in contract negotiations. Most hospital managed care contracts already have ASC groupers and fixed copays for outpatient services. Ultimately, ensuring a compliant, seamless referral process for the hospital setting improves overall physician and patient engagement.

4. Material Change + Managed Care:

Providers should review their contracts for terms that prohibit material change(s) without written consent from both parties. Payer policy changes may violate the intent and mutual understanding of the parties at the time a contract were entered into. Accordingly, the terms of a contract could prohibit application of these policies as they fundamentally alter the contractual terms of reimbursement as payers are directly interfering with historical understanding of steerage and volume which makes it nearly impossible for health systems to accurately project true forward-looking revenue impact. Additionally, these policies not only stand to permit payors to materially alter contract terms to the detriment of health systems, but they will also increase insurer revenues as they direct care from health systems to facilities acquired by insurance companies allowing them to become both payer and provider.

Take Control Through Contract Terms

Health system leaders should work with their Managed Care department to ensure:


    • Payers are not talking a health system into acceptance of these policies

    • Payers do not attempt to enforce  contractual dispute periods for payer policies as they generally do not apply when a policy creates a fundamental or material alteration to a contract

    • Delivery of policies that materially alter terms occur in the contractually proscribed manner e.g. not general publication but directed delivery

Deploy an Offensive Strategy for Renewal or Renegotiation

Providers should also review contracts that are approaching evergreen renewal or are subject to an upcoming period of renegotiation to do the following:


    • Employ firm language to protect providers against payers positioning themselves to be the sole arbiter of what location or setting of care is required for coverage and reimbursement

    • Consider revenue impact of policies of this nature and assess contracts for rate renegotiation

    • Include terms for additional payments or penalties due to volume loss directly related to payer policies

    • Include terms for penalty is a certain percentage of claim payments are not remitted within the prompt pay period

    • Affirmatively place providers in a position to protect steerage, volumes, and revenue

    • Clarify language regarding the manner in which policies or updates that have the potential to materially impact revenues, volumes, or place unnecessary or undue administrative burden on providers must be delivered (inclusive of named recipient and title, department, acknowledgment of receipt, etc.)

    • Prohibit a payer from applying any policy (or new term in an updated provider manual) against a provider contract that may fundamentally or materially alter the terms, or which operate in opposition to the intent of the agreement

    • Define clear avenues for dispute if a provider rejects a policy or term in a manner that is fair to the provider and protects them from bad faith payer tactics

Concerned about navigating this complexity on your own? You don’t have to.

At Ensemble Health Partners, we help providers manage complex payer regulations and adapt to evolving trends by empowering them with the data and operational expertise they need to remain compliant, avoid lost revenue, and continue to deliver on their missions of providing quality care to their communities.

Tap into the power of over 7,100 certified healthcare revenue cycle experts today by emailing [email protected].

Additional Resources:


[1] United Health Group, Brief: Shifting Common Outpatient Procedures to ASCs Can Save Consumers

More than $680 per Procedure, available at (last visited Setp. 23, 2021).

[2] United Health Group, Shifting Common Outpatient Procedures to ASCs Can Save Consumers More than $680 per Procedure: Methodology and Citations, available at,,am/UHG/PDF/2021/Site-of-Service-Citations-Methodology.pdf (last visited Sept. 23, 2021).

[3] Id.

[4] Id.

*This statistic shows the number of individuals served by UHG’s subsidiary UnitedHealthcare in 2020, sorted by business. In 2020, the number of commercially-insured individuals served by UnitedHealthcare stood at over 18.3 million. 18.3 million – 10% = 16.5 million