4 Strategic Tips for Smart Payer Contract Negotiation at Surgery Centers From Administrator Teva Eiler
Teva Eiler, administrative director of UPMC Hamot Surgery Center in Erie, Pa., suggests four steps ambulatory surgery center administrators can take to execute effective contract negotiation at their centers.
1. Be prepared or get the help you need. Before even beginning the process of contract negotiation, surgery center administrators should know whether or not they are prepared to take on the task alone. "This should not be a trial and error kind of situation. A bad contract usually comes back to haunt you," says Ms. Eiler. "Administrators wear many hats and not all of their job duties play to their strengths. If renegotiating a managed care contract doesn't make your list of core competencies, you have a couple of options."
Learn as much as possible about managed care contracting through literature, conferences, industry contacts and other available sources. This information will give you a solid foundation.
"If you are still hesitant or lacking, partner with a company that is very adept at this process. Participate with them every step of the way and hone your skills. Whichever way you decide to go, you must know your costs to ensure appropriate reimbursement," says Ms. Eiler.
2. Gather the necessary information to use as leverage. One of the biggest challenges surgery center leaders face when negotiating contracts is a lack of leverage. Surgery centers are built on a foundation of cost effectiveness. Successful negotiations simply require ASC leaders to present tangible evidence of cost savings, for both payers and patients. You should always enter negotiations with a clear goal in mind, have a proposal built to meet that goal and have the supporting cost documentation ready to share.
"Facility specific information, such as patient satisfaction, infection control rates, number of physicians, patient volume, etc., that highlights your worth to in the insurer can also be beneficial," says Ms. Eiler.
3. Don't be afraid to renegotiate existing contracts. The environment of surgery centers is anything but stagnant. Contracts should not remain unexamined year after year. "Any time you add a new procedure or a physician wants to introduce a new high ticket implant or supply to an existing procedure, contracts should be reviewed. Otherwise, review contracts annually," says Ms. Eiler. "If you originally negotiated a strong contract with escalators, you may not need to negotiate every year."
Keep in mind the areas that are the biggest revenue drivers for the center and concentrate your efforts there first. "Pay attention to your high volume cases even though it's easy to be seduced by the big ticket ones."
4. Never lose sight of your ultimate goal. The true purpose of contract negotiation is to gain favorable reimbursement for your surgery center. Keep in mind that as you revisit contracts, it is entirely possible payers will take into account how previous negotiations have been conducted.
"Try to establish a good working relationship with payers. Don't let it get adversarial," says Ms. Eiler. "Hopefully, you learned something new and established a contact for future considerations. The biggest benefit, however will be an increase in revenue that should drop directly to the bottom line – all things being equal."
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