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The ins & outs of managed care contracting: 6 core concepts

Working with payers is a critical, often frustrating, element of ASC operations.

During an Oct. 14 webinar, hosted by Becker's ASC Review, Lisa Rock, president of National Medical Billing Services, and Scott Allen, vice president of managed care contracting with National Medical Billing Services, broke down the process of managed care contracting and explained how to master this complex and continual process. Here are six key takeaways.

1. Set and review your chargemaster. There are three standard ways to set an ASC chargemaster. ASC leaders can use multiples of Medicare reimbursement, turn to resources such as FAIRHealth.org — a website that offers claims data sources for each state — or use state-collected claims data. Many ASC chargemasters are built from a combination of all three options.

Once you have a chargemaster built, apply cases to those charges. "Take cost into consideration, too," said Ms. Rock. "Not all contracts will cover expensive implants or multiple procedures. Once you have analyzed your contract, you may find you are falling below the allowed amount for certain cases." Read through your contracts to ensure you do not have limitations on chargemaster increases, so you can account for gaps such as these.

Contract limitations on chargemaster increases could dictate penalties for line item increases or allow payers to take an additional discount if the chargemaster is adjusted more than an allowed percentage. While it is important to carefully review contracts for language stipulating such penalties, it is possible to achieve chargemaster increases. "We see a lot of providers not taking advantage of these chargemaster increases," said Mr. Allen. "A payer may allow for an annual 5 percent increase, but an ASC hasn't done that in three or four years."

2. Examine clean claim requirements and payment language. Clean claims are key to smooth revenue cycle management, but achieving clean claims can be tricky given the intricacy of the language included in payer contracts. "Carriers will dictate which revenue code to use, which modifiers to use and even some homegrown codes," says Ms. Rock. "You might think you are supposed to be using a particular code, and that one little change will make all the difference in the world." One deviation from a contract's clean claim requirements and the claim could be denied.

Claim payment language can change, and those changes may not always be obvious. "If you are seeing a reimbursement change or denial, you need to figure out the cause," said Ms. Rock. One of the most typical changes is related to medical necessity, but she suggests going to the payer's website or contacting the payer to find the change.

3. Read contracts in full. Contract language may be complex and difficult to wade through, but ASC leaders must make sure that they always have the most current versions of their contracts on hand, and should read these documents in full.

ASC leaders need to be aware of what they are signing. What products participate in each particular contract? Does the contract include HMO, PPO, workers' compensation, Medicare, Medicaid or motor vehicle insurance? It is also critical to understand other issues that are included in contracts and affect how ASCs are paid, such as:

•    Coordination of benefits
•    Recoupment/offsets
•    Adjustments and refunds
•    Timely filing
•    Member billing
•    Payment of claims

4. Know contract term structure. Know the initial term of the contract. Can you renegotiate during that term? "That depends on whether or not you have good leverage. Usually carriers want to lock you into a two- or three-year term. However, it is possible to renegotiate during that term if an ASC is adding a new specialty or dropping a specialty,” said Mr. Allen.

5. Understand the various ASC reimbursement methodologies. "Reimbursement methodologies are one of the primary reasons why ASC billing and contracting is so difficult," said Ms. Rock. "ASC methodologies are all over the map." ASC reimbursement methodologies include but are not limited to the following, or even some combination of the following:

•    Groupers
•    Percentage of billed charges
•    Ambulatory payment classifications, ambulatory patient groups and enhanced ambulatory patient groups
•    Case rates
•    Carve outs
•    Implants and implant charges
•    Multiple procedures
•    Escalators, or smaller, set increases carried out through the length of a contract
•    Leveled reimbursements

6. Take advantage of leverage opportunities. When it comes to negotiating contracts, always do your homework and come to the table prepared with data. Show payers what cases an ASC brings in and how the center can save that payer money.

Download the webinar presentation here. View the webinar by clicking here.

Note: View archived webinars by clicking here.

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SCA acquires 7 facilities in Q2 2015, HCA shares fall 0.03% & more – 6 key notes on ASC companies

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