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ASC Payer Contract Negotiations: Key Concepts for Best Results

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Payer contract optimization is crucial for ambulatory surgery centers as payers continue to squeeze providers on reimbursement rates. There are several core concepts that can help ASC administrators, physicians and revenue cycle managers prepare for negotiations and achieve at the best results.

"Every contract is different, and if it's not outlined in the contract, it's best to contact the payer at least 90 days prior to the renewal date to notify them of your intent to renegotiate terms," said Rebecca Overton-Geise, director of revenue cycle management for Surgical Management Professionals in a Becker's ASC Review report. "It typically takes 30 days for the payor to load a contract, and you want to allow yourself ample time to handle the re-negotiation process."

Stay organized with a contact matrix that lists renewal dates and terms for the current contract. If you don't renew, some contracts will auto-renew at the same rates and you'll lose the opportunity to renegotiate higher rates.

It's important to focus on achieving higher rates for procedures that will make a difference at your center. Decide where to focus your efforts, where carve-outs are helpful and where you have some wiggle room. Ms. Overton suggests the following steps to determine each procedure's value:

• Pull top procedures for the facility (for example, top 50 procedures)
• For each procedure, list current contracted reimbursement, Medicare reimbursement and top three payer reimbursement rates
• Plug in cost per case for each procedure
• Compare current contracted reimbursement a) in comparison with Medicare, b) in comparison with cost, and c) in comparison with largest regional payers
•    Understand multiple procedure reimbursement, unlisted/ungrouped reimbursement and implant/supply reimbursement as it relates to rates

A careful analysis will also help you know what you can and can't accept for certain procedures. Contracts with under reimbursement are difficult to make up with volume. If a payer won't budge on rates, present an economic argument as the low-cost provider in your area.

"It helps the payor if you are able to control total costs," said Stephen Rothenberg, JD, a consultant with Numerof & Associates, Inc., in a Becker's ASC Review report. "Knowing the economic and clinical value you bring to the payor is important because you may be able to negotiate higher rates. Show the payer you help control their expenses overall, and remind them that they may be paying more for a procedure with low complication rates compared to others in the market."

Dan Connolly, MHS, ARM, vice president of payer contracting for Pinnacle III, says tools that can be helpful during payer contract negotiations include:

•    List of your physicians and affiliated facilities to show where physicians would take the cases if they are unsustainable at the ASC;
•    ASC cost data, especially on materials and implants;
•    Information on patients who were turned away in the past few months because rates for their procedure were too low;
•    Knowledge of current Medicare rates to make sure your contracted rates don't dip below Medicare rates;
•    Reimbursement rates at the hospital to show value;
•    Clinical quality data for the ASC as compared to other providers;
•    Data on the payer's main competition rates to narrow any gaps.

Payers are slowly moving toward a pay-for-performance and evidence-based mode of reimbursement for care. Some are entering into bundled payments or other shared savings arrangements with providers, and ASCs could take advantage of those opportunities. Contact the payer and see what options are available in your market if your surgeons and staff are onboard.

"Contracts between ASC facilities and key private payers can be sculpted to meet not only the member's medical needs but ultimately respond to new and improving technology advances," says Carolyn Neumann, CPC, Senior Manager, Coding & Coverage Access at Specialty Healthcare Advisers. "Within this more flexible business model, where contracts address reimbursements directly, there is opportunity to grow a currently slow-to-adapt-system into a functioning medical business model."

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