1. Not all payors care about the new Medicare methodology.
Many commercial payors model their fee schedule off of Medicare’s, and likely had your ASC’s contract following a grouper system similar to Medicare’s nine-grouper system. But not all payors use a payment system based upon CMS methodology, so your efforts to get these payors to increase your reimbursement for procedures that are now paid higher under the new Medicare system may be met with blank stares.
“Payors that are not on a payment system that’s based upon the CMS methodology, they don’t really care” about the new payment system, says Ms. Kehayes. “It has absolutely no impact on them if they have a proprietary payment methodology/fee schedule that is not based upon the Medicare system, in my opinion.”
While you can certainly try showing these payors Medicare’s new reimbursement rates and hope they are willing to consider them as a baseline, another good approach is to…
2. Show payors they save with you.
If your ASC is not performing some procedures that you can and would like to bring into your center because of low reimbursement rates offered by payors, it is likely that these procedures are going to the hospital. If this is the case, your payors are probably reimbursing the hospital at a higher rate than you would expect and be willing to accept to perform the same procedures. If you can demonstrate the savings opportunity that exists for the payors if these procedures are performed at your ASC, you may find better success with your negotiations.
“You can say, ‘There’s a lot of opportunity if you negotiate with us a reasonable rate that lets us move these cases from the hospital,’ but you have to be able to get your hands around the volumes that your doctors are doing at the hospital,” says Ms. Kehayes.
If this data is not something you can obtain from your physicians, the payors should have the ability to gather this information.
“The payors have access to that information in their claims databases, but it’s a matter of getting them to look at the data,” Ms. Kehayes says. “What they typically need to look is really the group’s names or their tax ID numbers. If [the physicians are] your partners, you should be able to disclose that to them, but it might be a good idea to review the approach with your partners and inform your surgeons that the payor needs this information in an effort to enhance the ASC’s contract.”
Once you can demonstrate the potential volume the payor could move to your ASC and the money it could save as a result, you will want to have a strong argument for the particular reimbursement rate you are seeking for your contract. Fortunately, there are some logical arguments (tips six and seven) you can make to support your claim for good rates that will still save the payors money.
3. Accept less than HOPD Medicare rates.
Medicare reimbursement to HOPDs is often the baseline to look at for presenting the argument that the ASC presents a cost savings opportunity, and it is public information available on the CMS Web site.
If your case mix proves to be advantageous under the APC payment methodology, and your contracts are based upon a Medicare grouper methodology, they are typically going to value at rates below hospital Medicare rates. In these situations, “Go and try to negotiate 90, 95 or even 100 percent of the hospital (Medicare) rates,” says Ms. Kehayes. “You can demonstrate to the payor how much money you can save them by making the assumption (that they use Medicare as a baseline). I say to the payors all of the time that ‘there’s no way you can tell me you’re paying a hospital in this urban location Medicare rates. This is what I can offer you to help save you money.’ You’re now showing the payor how you can save them money.”
This approach can be most effective when the payor is eager to have cases move out of the hospital. However, it is critical that the ASC understand where their current contract value is in terms of APC compensation, which is highly impacted by case mix.
With the new payment system reimbursing ASC-approved procedures an average of 65 percent of HOPD’s Medicare rates, a contract that brings these rates up to 90 percent or more should be a nice boost if your case mix is favorable under the new system, such as orthopedics, general surgery and ENT.
Success with this tactic is not uncommon. In one particular situation, an ASC Ms. Kehayes works with was not performing cases because the reimbursement rates were not high enough.
“I kept saying to the insurance companies, ‘why wouldn’t you want to do this deal? If you do this deal, you’re going to move volumes from the hospital,’” says Ms. Kehayes. “How many commercial payors do you think are paying a hospital the hospital Medicare rates? A good guess would be none. They’re paying some percentage above that. If a surgery center can do surgery at below hospital Medicare rates, that’s your argument because now you’re on the same payment system, on the same playing field.”
4. Push for fully implemented Medicare rates.
While many payors that have followed the Medicare methodology in the past are fighting a switch to the APC system, if you have a payor that is willing to consider the new Medicare payment rates as a baseline from which to negotiate your contract, push for the fully implemented rates in circumstances when the fully implemented rates are more profitable for your center than the transitional rates.
“I show them the fully implemented rates published in November 2007,” says Ms. Kehayes. “You can argue that the fully implemented rates are a better representation of cost since the new payment systems is based upon the hospital outpatient prospective payment system and there is cost data collected from hospitals and reported to CMS that impact APC payment weights and rates for HOPDs. Therefore, it can be argued that the fully implemented rates are a better representation of cost which is being acknowledged by CMS, and oftentimes increases the success of negotiations with payor by providing more data to support your claim for increased compensation.”
5. Make sure “grouper” means what you think it means.
It’s understandable to see the term “grouper” and immediately think of it as a Medicare methodology reference. Unfortunately, looks can be deceiving.
“ASCs can sign a contract that says it is based upon a grouper methodology, but it doesn’t necessarily say that it’s Medicare groupers and they just assume it’s Medicare groupers just because it says grouper,” says Ms. Kehayes.
Going by this assumption of Medicare groupers, an ASC may not request the “mapping” from the payor, which describes which payment group a CPT code will fall under, because the ASC thinks it already knows the rates since it knows the Medicare grouper system. Only after performing a few cases does the ASC learn that its contract follows a different grouper methodology.
“People get caught on that all of the time,” says Ms. Kehayes. “Make sure you request the mapping to the methodology. Unless they tell you it’s based upon Medicare — then the language needs to say it’s following Medicare’s mapping.”
If it follows a different methodology, obtain the mapping and take, at least, your top 20 codes and make sure you understand their payment amounts, she says.
6. Keep CPT codes in the groups you agree to.
So you sign a contract which follows a grouper methodology. You’re happy with the reimbursement rates which correlate with each group. Several months go by and everything looks fine. Then, suddenly, one of your top procedures is reimbursed significantly less than you contracted. You call the payor and ask why this happened. That’s when you learn the payor moved that procedure’s CPT code from its original group into a group that reimburses less.
“You have to watch for contract language allows the insurance company to change the assignment of the CPT code to the group,” says Ms. Kehayes. If they include this language, “they don’t have to renegotiate with you. They just have to send you a notice. They just say, ‘dear provider, effective Jan. 1, find our CPT mapping.’”
Unfortunately, announcements like these are sometimes thrown away because they appear to be updates that ASCs do not think apply to them, perhaps because their contract extends through this new date. But with language in the contract allowing grouper-placement flexibility to the payor, ASCs can find themselves in a bind,
It can be interpreted that, “You’ve agreed to (the new contract) once you cashed a check,” Ms. Kehayes says. “It’s implied consent.”
When this happens, it may warrant further discussion with a legal advisor.
7. Fight for GI and pain management.
If your ASC performs cases in GI and pain management, which took a reimbursement hit with the movement to the new system, you will want to preserve the rates in the old payment system and use them as your baseline.
“You need to do your analysis and show the payors how much you are going to lose (by moving to the new rates) and you need to negotiate that conversion factor up,” says Ms. Kehayes.
If you’re in a multispecialty ASC that performs GI and pain, along with some of the other specialties receiving a boost under the new system, and a payor is moving to APCs, you will want to split the conversion factor.
“What that means is you’re negotiating two different conversion factors for groups of codes,” Ms. Kehayes says. “Because when you get into the APC world, you’re actually negotiating conversion factors just like you do for RBRVS (Resource-Based Relative Value Scale, the physician payment schedule for Medicare) for physician compensation.
While you can’t negotiate the relative weights, a measure that CMS uses to rank the costs of performing procedures in one APC as compared to other APCs, you can negotiate the conversion factor for APCs.
“Say to (the payors), ‘I want this conversion factor for this band of codes, and for this other band of codes, I want this conversion,’” Ms. Kehayes says. “They may tell you their computer systems can’t handle it, but I would push that argument hard.”
8. Give up those cases you can to get the procedures you really want.
Successful contract negotiations usually involve some compromises. The payor is not likely to give you everything that you request, so to get what you really want you must be prepared to give the payor a little of what it wants.
It is important to go to the negotiating table with a list of cases you really want to do — the cases that drive the financial stability and success of your ASC — and to be prepared to argue confidently and diligently for those you cases. You should also have a list of cases that you could perform in your ASC if the reimbursement was right, but would be willing to take less money to receive better rates on the cases that will make or break your organization.
“Sometimes a key doctor at a center will get fixated on one or two CPT codes that might represent five cases a year,” says Ms. Kehayes. “It’s a give and take situation. Give up on the little cases to make the money on the big cases. Give up on the cases that represent a very, very small volume that don’t put the center at risk” if you stop performing them.
If you’re on a grouper methodology, you need to understand the distribution of your cases among the groupers and come to the table knowing which groupers are your most important and which are not.
For example, let’s say you’re in a traditional nine-group methodology; fifty percent of your cases are in group three; 2 percent in group one; 30 percent in group four; 10 percent in group five and nothing in group eight.
“Trade off the groupers that don’t have a lot of volume, such as groups one and eight, so you can focus on the groups that add more value,” says Ms. Kehayes. “You can leverage that, but you have to understand where your distribution of cases is in their methodology. You should at least look up your top ten codes with each payment methodology.”
You certainly want to have the data and arguments to speak to why you should receive excellent rates for all of the cases you could perform in your ASC, but understand in the back of your mind where you will give a little to the payor to hopefully gain a lot.
9. Use local government contracting trends to support your case.
If you are looking to strengthen an argument with a payor for why you should receive higher reimbursement using Medicare as a baseline, look no further than your local government.
In many states, Medicaid, the state workers’ compensation and even the state’s employee health plan are following the new Medicare payment system to determine their reimbursement rates. If you do your research and learn that this is true in your state, you can argue with your payors that these other major contracts view Medicare as an accurate and meaningful guide for what is considered a fair reimbursement baseline.
“People should determine whether your state’s wokers’ comp moved to it, has Medicaid moved to it — that’s all public information,” says Ms. Kehayes. “In Washington, workers’ comp, July 1, went to a multiple of the fully implemented (Medicare payment system) — they didn’t do the transitional. The state plan is following suit and we expect Medicaid to move in the same direction in the very near future.”
Finding this information should not prove difficult. Your ASC likely received notifications about any changes, although they may have been overlooked. Ms. Kehayes suggests a visit to your state department of health and department of labor of industries Web sites to learn about any contracts that have moved or plan to move to the new APC methodology.
10. Ensure a new payment system-based contract transitions or ends.
If one of your payors is willing to base its contract on the 2008 rates of the new payment system, make sure the contract says the rates will follow the transitions so you do not remain stuck at 2008 rates.
“If they will not commit to moving with the transition of Medicare, then you either need an escalator that equates to the same amount or you need it to be a defined term so that it forces you into renegotiation, or you could effectively be falling below,” says Ms. Kehayes.
Ms. Kehayes notes she asks for a 10 percent escalator to keep the rates close to the transitions if she cannot convince the payor to follow them.
