5 Steps for Surgery Centers to Negotiate Top Payor Rates
Angela McComb, Director of Managed Care with ASD Management, discusses five steps for surgery center administrators to negotiate top rates with insurance companies.
1. Know how the insurance company balances quality and cost. Every insurance company provides a list of in-network facilities to their members and often ranks facilities as a "preferred" or "star" facility. Sometimes the facilities are ranked by quality and cost measures, but other times the companies are focusing on just one aspect of care. Surgery center administrators must know how each payor's system works and understand how contract negotiations can impact this rating in the future.
"Before even approaching the insurance company, have an understanding about what that payor may or may not be focusing on," says Ms. McComb. "If they are offering special plans to employers based only on cost, you could be the best quality provider out there on the market and they could still rate you lower for cost indications on their website."
Recently, more insurance companies have been highlighting facilities on their websites meant to drive patients to one facility over another. "The appearance to the lay person is that they are being driven or steered toward a certain provider who is best, but sometimes it's based only on cost," says Ms. McComb. "A patient could make a mistake and choose a facility because it's cheaper."
If the company isn't persuaded by quality reporting, focus more on potential cost savings during negotiations, especially when comparing the surgery center to hospital costs.
2. Discuss patient satisfaction along with quality indicators. When insurance companies do consider quality indicators when negotiating contracts, have your information about adverse events or complications at the surgery center available and discuss how your numbers compare with regional and national averages. Regardless of how the insurance company assesses quality, you should also discuss patient satisfaction at your center.
"Patient satisfaction is definitely something you want to bring up along with any quality indicator at your facility, keeping in mind that cost is often the primary concern," says Ms. McComb. "Facilities have to make their own decision if they are willing to be one of the lowest cost providers in the community to drive patient volume to the facility If the facility decides to compete on cost, they may not get rate increases or could experience a rate decrease because the insurance company ties the preferred provider ranking to the facility's contract rate."
For example, if there are two different endoscopy centers in the area with similar quality reports and no adverse events, but surgery at one center costs $100 more than at the other, the insurance company is more likely to market the other center where procedures cost less by placing it higher on the "preferred" list.
3. Keep track of the quality benchmarks for each payor. Right now, there isn't a baseline quality benchmark across all payors. Some companies may consider 95 percent as their benchmark while others have 80 percent as the quality benchmark.
"Until insurance companies can come up with and agreed upon a uniform measure of quality for ASCs, it will be very difficult for the companies as well as providers to agree upon the definition of a good quality provider. For this reason we fundamentally don't agree with the way the quality indicators are measured due to the lack of a consistent baseline," says Ms. McComb. "In some cases, one payor may rate you as a quality provider and one may not. This makes it very difficult for patients to figure out who actually provides the best quality of care in their area."
4. Discuss why the specialties at your center make you different. When insurance companies are looking at rates, they group all surgery centers within a certain area together. If your surgery center performs more costly cases, such as orthopedics, it isn't appropriate to compare it with surgery centers performing lest costly procedures, such as colonoscopies.
"A lot of times insurance companies pay on strict grouper methodology and they want to argue that services falling under the same classification should be paid the same even though they are a different service," says Ms. McComb. "If you have a GI center and an orthopedic center, the insurance company will throw them all into the same basket but they shouldn't be compared in terms of costs."
Make sure this difference is clear to the insurance company and discuss why the comparison is unfair. If your surgery center provides a unique service in the region, highlight that as well.
"If you are a center offering services that aren't offered anywhere else in your community, you've got to explain to the insurance company that comparing your rates with another ASC that doesn't provide the same service is not a valid comparison," says Ms. McComb.
5. Know that getting the best rates may not make you a low cost provider. Contracting for the best rates possible is important for surgery centers to capture reimbursement. However, understand that negotiating higher payment rates — whether based on quality reports or another factor — may mean your surgery center is no longer classified as a "low-cost" or preferred provider by the insurance company.
More Articles on Surgery Center Management:
4 Benchmarks That ASC Leaders Commonly Overlook
4 Ways to Maximize the Cost and Space Efficiency in Your ASC
When 5010 Implementation Delays Surgery Center Payment: 4 Ways to Respond
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